Annual Report
2018

December 1, 2017 to November 30, 2018

Kewpie Corporation

The information contained in this report is derived from Kewpie
Corporation’s (the “Company”) Annual Securities Report in Japanese filedwith the Commissioner of the Financial Services Agency on February 28,
2019 in accordance with the Financial Instruments and Exchange Law, andhas been translated into English for the convenience of readers outside Japan.

Document Title:

Annual Securities Report

Corporate Name:KEWPIE KABUSHIKI-KAISHAEnglish Corporate Name:

Kewpie Corporation

Name and Title of Representative:

Osamu Chonan
Representative Director
President and Chief Executive Corporate Officer

Location of Head Office:4-13, Shibuya 1-chome, Shibuya-ku,
Tokyo 150-0002, Japan

Contact:

Toshihiro Kaneko
Senior General Manager of Management Promotion Division

Telephone:+81-3-3486-3331

Table of Contents

I.

II.

III.

IV.

V.

VI.

Page
Outline of the Company ............................................................................................................................... 1
1. Principal Management Indexes ............................................................................................................ 1
2. Nature of Business ............................................................................................................................... 3
3. Outline of Associated Companies ........................................................................................................ 5
4. Employees ............................................................................................................................................ 7
Business Operations ................................................................................................................................... 8
1. Management Policy, Business Environment, Tasks Ahead, Etc. ........................................................ 8
2. Operational Risks ............................................................................................................................... 16
3. Management Analysis of Financial Position, Operating Results and Cash Flows ............................. 19
4. Material Contracts .............................................................................................................................. 24
5. Research and Development ............................................................................................................... 24
Facilities and Equipment ........................................................................................................................... 30
1. Investments in Facilities and Equipment ............................................................................................ 30
2. Principal Facilities and Equipment ..................................................................................................... 31
The Company ............................................................................................................................................ 34
1. Shares ................................................................................................................................................ 34(1) Number of authorized and issued shares .................................................................................... 34(2) Stock acquisition rights ................................................................................................................ 34(3) Exercise of bonds with stock acquisition rights containing a clause for exercise price revision . 34
(4) Principal shareholders ................................................................................................................. 35
2. Acquisition of the Company’s Treasury Stock .................................................................................... 36
3. Dividend Policy ................................................................................................................................... 37
4. Corporate Governance ....................................................................................................................... 37
Financial Information ................................................................................................................................. 58
Consolidated Financial Statements .......................................................................................................... 59(1) Consolidated financial statements ............................................................................................... 59(2) Other .......................................................................................................................................... 118(Independent Auditors’ Audit Report and Internal Control Audit Report) ................................................ 120
Stock Information of Reporting Company ............................................................................................... 122

Outline of the Company 1

I.

Outline of the Company

1. Principal Management Indexes(1) Consolidated principal management indexes for the five years ended November 30, 2018
Period ended

Nov. 2014

Nov. 2015

Nov. 2016

Nov. 2017

Nov. 2018

Net sales(millions of yen)

553,404

549,774552,306

561,688573,525

Ordinary income(millions of yen)

25,36827,22431,36432,51134,349Profit attributable to owners of parent(millions of yen)

13,366

16,97317,09318,09918,320Comprehensive income(millions of yen)

18,96826,15910,95533,897

17,786

Total net assets(millions of yen)

220,397244,717245,861

263,432

266,100

Total assets(millions of yen)

356,994

373,017385,914419,207421,373

Net assets per share(yen)

1,284.36

1,403.05

1,420.63

1,539.94

1,582.27

Earnings per share

(yen)

88.69

111.82113.47121.05124.85

Earnings per share – diluted

(yen)

––

––

––

––

––

Equity ratio

(%)

54.6

57.1

55.1

54.0

53.7

Return on equity

(%)

7.0

8.3

8.0

8.2

8.1

(times)

21.9

26.4

23.8

23.8

22.1

Cash flows from operating
activities(millions of yen)

34,39228,09445,26027,234

41,778Cash flows from investing
activities(millions of yen)

(30,847)(31,181)(32,046)(31,421)(20,199)

Cash flows from financing
activities(millions of yen)

(3,149)(7,101)(5,805)

4,010(15,293)

Cash and cash equivalents
at the end of the fiscal year

(millions of yen)

44,78834,84140,79041,41147,970

Number of regular full-time employees,
and average number of temporary employees inbrackets

12,933[11,840]

13,478[11,519]

14,095[11,150]

14,924[11,456]

14,808[9,843]

Price earnings ratio(Notes) 1. Consumption taxes are not included in net sales.
2. Figures presented for the fiscal year ended November 30, 2015, have been retrospectively adjusted to reflect changes in accounting policy
with respect to policies for recording net sales, taking effect from the fiscal year ended November 30, 2016.
3. Earnings per share – diluted is not presented because of no issue of potential shares.

2 Outline of the Company(2) Non-consolidated principal management indexes for the five years ended November 30, 2018
Period ended

Nov. 2014

Nov. 2015

Nov. 2016

Nov. 2017

Nov. 2018

Net sales(millions of yen)

237,655

210,426

205,102

204,072

203,449

Ordinary income(millions of yen)

10,992

11,472

12,973

16,06016,400

Profit(millions of yen)

6,905

7,910

9,161

12,691

11,586

Paid-in capital(millions of yen)

24,104

24,104

24,104

24,104

24,104

153,000,000

153,000,000

153,000,000

150,000,000

150,000,000

Total number of issued shares
Total net assets(millions of yen)

147,461

152,916

152,232

153,669

147,756

Total assets(millions of yen)

238,781

228,291

242,768

261,193

253,251(yen)

970.75

1,007.57

1,017.15

1,045.05

1,032.95

Annual dividends per share, and interim
dividends per share in brackets
(yen)

23.0
[11.5]

29.0[12.5]

34.5[15.0]

36.5[18.0]

38.0[19.0]

Earnings per share

(yen)

45.78

52.12

60.82

84.88

78.96

Earnings per share – diluted

(yen)

––

––

––

––

––

Equity ratio

(%)

61.8

67.0

62.7

58.8

58.3

Return on equity

(%)

4.8

5.3

6.0

8.3

7.7

(times)

42.4

56.7

44.4

34.0

34.9

(%)

50.2

55.6

52.6

43.0

48.1

2,549
[918]

2,520
[963]

2,510
[926]

2,523
[853]

2,508
[774]

Net assets per share

Price earnings ratio
Dividend payout ratio

Number of regular full-time employees,
and average number of temporary
employees in brackets(Notes) 1. Consumption taxes are not included in net sales.
2. Figures presented for the fiscal year ended November 30, 2015, have been retrospectively adjusted to reflect changes in accounting policy withrespect to policies for recording net sales, taking effect from the fiscal year ended November 30, 2016.
3. Earnings per share – diluted is not presented because of no issue of potential shares.

Outline of the Company 3

2. Nature of Business
The Kewpie Group (the “Group”) consists of the Company, seventy-seven consolidated subsidiaries,
seven affiliated companies, and one other associated company. The Group’s principal businesses are
manufacturing, wholesaling, transportation and warehousing of food products.
The business categories of the Group and the position of the Company and these principal associatedcompanies in the relevant businesses are summarized below.
The business categories shown below are the same categories as the reportable segments.
Business category

The Company and principal
associated companies

Major handling items / services

Kewpie Corporation
Q&B FOODS, INC.
Dispen Pak Japan Co., Inc.
Condiments products

Hangzhou Kewpie Corporation

Mayonnaise and dressings

Kpack Co., Ltd.
BEIJING KEWPIE CO., LTD.
KEWPIE (THAILAND) CO., LTD.
Kewpie Jyozo Co., Ltd.
Kewpie Egg Corporation
Zen-noh Kewpie Egg-station Co., Ltd.

Egg products

Kewpie Corporation

VinegarLiquid egg, frozen egg, and dried egg

Kanae Foods Co., Ltd.

Egg spread, thick omelet, and shredded
egg

HENNINGSEN FOODS, INC.

Dried egg

Kewpie Corporation
Deria Foods Co., Ltd.
Delicatessen products

Shunsai Deli Co., Ltd.

Salads and delicatessen foods

Potato Delica Co., Ltd.
Salad Club, Inc.
Kewpie Corporation
Processed foods

Aohata Corporation
Co-op Foods Co., Ltd.

Fine chemical products

Common business operations

Jams, pasta sauces, sweet corn, baby
foods, and nursing care foods

Kewpie Corporation

Hyaluronic acid and others

K.R.S. Corporation

Transportation and warehousing of foodproducts

K. Tis Corporation
Distribution system

Packaged salads

S.Y. Promotion Co., Ltd.

Transportation of food products

Kewso Services Corporation

Sale of vehicles, distribution equipment,
fuel and other products related totransportation and warehousing of foodproducts

Shiba Seisakusyo Co., Ltd.

Sale of food production equipment

The Group Business Network chart on the next page shows the relationships of the business activities ofGroup companies.
K.R.S. Corporation, a consolidated subsidiary, is listed on the first section of the Tokyo Stock Exchange(TSE), while Aohata Corporation, a consolidated subsidiary, is listed on the second section of the TSE.
(Notes) 1. As of December 1, 2018, Kewpie Egg Corporation has conducted an absorption-type merger of Kanae Foods Co., Ltd.
2. Gourmet Delica Co., Ltd. has been excluded from subsidiaries as the Company transferred the shares of the said company to Mitsubishi
Corporation during the fiscal year ended November 30, 2018. For further details, refer to “V. Financial Information, Consolidated Financial
Statements, (1) Consolidated financial statements, Notes, Business Combination.”4 Outline of the Company(Group Business Network)
Business partners

Kewpie Group

Domestic
Condiments products

Egg products

Delicatessen products

Kewpie Corporation
Kewpie Jyozo Co., Ltd.
Kpack Co., Ltd.
Deft Co., Ltd.
Dispen Pak Japan Co., Inc.
Other

Kewpie Corporation
Kewpie Egg Corporation
Kanae Foods Co., Ltd.
Zen-noh Kewpie Eggstation Co., Ltd.
Kewpie-Egg World Trading Co., Ltd.

Kewpie Corporation
Deria Foods Co., Ltd.
Salad Club, Inc.
Shunsai Deli Co., Ltd.
Potato Delica Co., Ltd.
Other

Processed foods

Fine chemical products

Distribution system

Kewpie Corporation
Aohata Corporation
Co-op Foods Co., Ltd.
Hashikami Kewpie Co., Ltd.
Tosu Kewpie Co., Ltd.
Other

Kewpie Corporation
Tou Kewpie Co., Ltd.

K.R.S. Corporation
K. Tis Corporation
S.Y. Promotion Co., Ltd.
Sun Family Corporation
Kewso Services Corporation
Other

Common business operations
Kewpie CorporationSan-ei Provisions Co., Ltd.
TO AD KEWPIE CO., LTD.
Shiba Seisakusyo Co., Ltd.
K.System Co., Ltd.
Other

Overseas
Condiments products

Egg products

Common business operations

Hangzhou Kewpie Corporation
BEIJING KEWPIE CO., LTD.
Q&B FOODS, INC.
KEWPIE (THAILAND) CO., LTD.
Other

HENNINGSEN FOODS, INC.
OtherKIFUKI U.S.A. CO., INC.

Outline of the Company 5

3. Outline of Associated Companies
Parent company
Not applicable.
Consolidated subsidiaries
Trade name

Address

Paid-in
capital/equityinvestment

Businesslines

Percentage ofour voting
rights(Note 2)

Kewpie Egg
Corporation(Note 1)

Chofu-shi, Tokyo350
Production and sale ofmillion yen liquid and frozen egg

100.0

Deria Foods Co., Ltd.

Chofu-shi, Tokyo

50
Sale of salads andmillion yen delicatessen foods

100.0

Kewpie Jyozo Co., Ltd. Chofu-shi, Tokyo450
Production and sale ofmillion yen vinegar

100.0

K.R.S. Corporation(Notes 1, 3, 4, 5 & 6)

Chofu-shi, Tokyo

4,063
Warehousing andmillion yen transportationSan-ei Provisions Co.,Ltd.

Chofu-shi, Tokyo

Co-op Foods Co., Ltd.

Chofu-shi, Tokyo

Kanae Foods Co., Ltd.
(Note 1)

Chofu-shi, Tokyo

Zen-noh Kewpie Eggstation Co., Ltd.

Goka-machi,
Sashima-gun,IbarakiQ&B FOODS, INC.

California, USA

KIFUKI U.S.A. CO.,INC.

Delaware, USA

HENNINGSENFOODS, INC.

Nebraska, USA

Soka Delica Co., Ltd.

Soka-shi, Saitama

Hashikami Kewpie
Co., Ltd.

Hashikami-cho,
Sannohe-gun,
Aomori

Dispen Pak Japan Co.,Inc.

Production and sale of
Minami-Ashigara140
foods, and subdividing
shi, Kanagawa
million yen
and packing work

Shiba Seisakusyo Co.,Ltd.
Salad Mate Co., Ltd.
Potato Delica Co., Ltd.

57
Sale of products formillion yen commercial use
Production and sale of50bottled, canned and/or
million yen
retort pouch foods
Production and sale ofprocessed egg,
50
including egg spread,million yen
thick omelet andshredded egg
Production and sale of105
dried egg and liquid
million yen
egg
4,800
Production and sale ofthousandcondiments
U.S. dollars
Investment in and7.17
management of U.S.
U.S. dollars
associates
1.92
Production and sale ofthousand egg products andU.S. dollars dried meats
98
Production and sale ofmillion yen delicatessen foods
Production and
10
processing of foods;
million yen
outsourced work

Kawasaki-ku,
Kawasaki-shi,
Kanagawa

Production of
10
machinery andmillion yen
equipment
Sale of condiments and
10
Minato-ku, Tokyo
million yen processed foods
Azumino-shi,
Nagano50
Production of frozen
million yen and chilled foods

Sale of condiments,
10
frozen and processed
million yen
foods
50
Consigned clerical
K.System Co., Ltd.
Machida-shi, Tokyo
million yen work
Goka-machi,
30
Production and sale of
Kpack Co., Ltd.
Sashima-gun,million yen condiments
Ibaraki
Production and
10
Tosu Kewpie Co., Ltd.
Tosu-shi, Saga
processing of foods;
million yen
outsourced work
Deft Co., Ltd.

Shibuya-ku, Tokyo

140
millionyuan

Relationship with the Company
Interlocking
directors(D) or corporate
auditors (A)Financefrom theCompany

Operatingtransactions

None

Purchase of products and raw
materials, etc.

D or A

2

Employees

8

D or A
Employees
D or A
Employees

2
4
3
2

226
million yen

45.7
(0.3)
[5.9]

Employee

1

None

66.2

D or A
Employees

1
4

None

D or A

2

Employees

2

D or A

2

100.0

100.0

Sale of products

Leasetransactions
Leases ofoffices andfactories
Leases ofoffices

Purchase of products and raw
materials
Consignment of storage andtransportation of products andraw materials of Group
companies
Sale of products and purchaseof raw materials

Leases ofoffices
Leases ofoffices, land
andwarehouses
Leases ofoffices

1,217
million yen

Purchase of products

Leases ofoffices

None

Purchase of products

Leases ofoffices andfactories

Purchase of products andraw materials

Leases offactories

None

Employees

3

D or A

2

Employees

3329
million yen

100.0(100.0)

Employees

2

None

None

None

100.0

D or A

3

None

Overall management of U.S.
associates

None

D or A

2

Employees

2

100.0

D or A
Employees

2
2

None

Sale of products

Leases ofoffices

100.0

Employee1

NoneConsignment of production

Leases offactories

D or A

2
None

Purchase of products

Leases ofoffices andfactories

51.4

100.0
(100.0)51.0

Liabilities forguarantee
None
97
million yen

None

Employees

3

100.0

Employees

56
million yen

Purchase of machinery andequipment

100.0

Employees

2

None

Purchase and sale of products

None

Purchase of products

Leases offactories

None

100.0
(0.9)

Employees

4181
million yen

100.0

Employees

4

None

Sale of products

Leases ofoffices

80.0

Employees

4

None

Consignment of clerical work

Leases ofoffices

100.0

Employees

6

None

Purchase of products

Leases ofoffices

100.0

Employee1

NoneConsignment of production

Leases offactories

D or A

1
None

None

None

Employees

4

Employee1

NoneConsignment oftransportation services

None

Sale of products

None

66.4
(7.1)

Hangzhou Kewpie
Corporation

Zhejiang Province,
China

S.Y. Promotion Co.,Ltd.

Koto-ku, Tokyo

200
Transportation
million yen

88.4(51.0)

Seto-shi, Aichi

30
Production and sale ofmillion yen delicatessen foods

100.0(100.0)

Employees

4372
million yen

Ishikari Delica Co.,
Ltd.

Teine-ku, Sapporo30
Production and sale ofshi, Hokkaido
million yen delicatessen foods

100.0(100.0)

Employees

4

None

Sale of products

None

Hanshin Delica Co.,Ltd.

Itami-shi, Hyogo

10
Production and sale ofmillion yen delicatessen foods

100.0(100.0)

Employees

6

None

Sale of products

Leases offactories

Seto Delica Co., Ltd.

Production and sale ofcondiments6 Outline of the Company

Trade name

Address

Paid-in
capital/equityinvestment

Business
lines

Salad Club, Inc.

Chofu-shi, Tokyo

300
Processing and sale ofmillion yen fresh vegetables

K. Tis Corporation

Chofu-shi, Tokyo82
Warehousing andmillion yen transportation

BEIJING KEWPIE CO.,LTD.

Beijing, China

Tosu Delica Co., Ltd.

Tosu-shi, Saga

Kewpie Ai Co., Ltd.
Kitakami Delica
Co., Ltd.
Fujiyoshida Kewpie
Co., Ltd.

42
millionyuan

Percentage ofour voting
rights(Note 2)51.0
100.0
(100.0)D or A

2

Employees

3

None

Financefrom theCompany

Operatingtransactions

Leasetransactions
Leases ofoffices andfactories

None

Sale of products andpurchase of raw materials

None

None

None

None

None

None

D or A

1

Employees

5100.0(100.0)

Employees

4

None

Sale of products

Leases offactories

Consigned clerical30
million yen work

100.0

Employees

5

None

Consignment of clerical work

Leases ofoffices

20
Production and sale ofmillion yen delicatessen foods

100.0(100.0)

Employees

347
million yen

Sale of products

None

100.0

Employees

2

None

Consignment of production

Leases offactories

100.0

Employees

4

None

Consignment of sales

Leases ofoffices

Production and sale ofcondiments

65.0

10
Production and sale ofmillion yen delicatessen foods

Machida-shi, Tokyo
Kitakami-shi, Iwate
Fujiyoshida-shi,
Yamanashi

Relationship with the Company
Interlocking
directors(D) or corporate
auditors (A)Production and
10
processing of foods;
million yen
outsourced work
Planning, production
10
and services for sales
million yen
promotion

K.SS Co., Ltd.

Shibuya-ku,
TokyoKewso Services
Corporation

Chofu-shi, Tokyo

30
Sale of equipment for
million yen cars

100.0
(100.0)

None

None

Rental of cars for factories

KLQ Corporation

Toyokawa-shi,
Aichi

30
Transportation
million yen

100.0(100.0)

None

None

None

None

San-ei Logistics
Corporation

Akishima-shi,
Tokyo

38
Transportation
million yen

100.0(100.0)

None

None

None

None

None

None

None

None

Sale of products

Leases offactories

Production and sale of260
condiments, vinegar,
Bangkok, Thailand
million baht salads and processedfoods

Rental of cars
for factories

D or A

3

Employees

5100.0(100.0)

Employees

7

Osaka San-ei Logistics
66
Hirakata-shi, Osaka
Transportation
Corporation
million yen

90.0(90.0)

None

None

None

None

Sun Family
Corporation

KEWPIE(THAILAND) CO.,LTD. (Note 5)
Shunsai Deli Co., Ltd.

KAT Corporation
KEWPIE MALAYSIA
SDN. BHD.
KEWPIE VIETNAM
CO., LTD.
PT. KEWPIEINDONESIA
Kewpie-Egg World
Trading Co., Ltd.
Green Message Co.,Ltd.
Tou Kewpie Co., Ltd.
Aohata Corporation(Notes 3, 5 & 6)

Akishima-shi,
Tokyo

Yoshikawa-shi,
Saitama99
Transportation
million yen

90.0(90.0)

None

None

None

None

Hirakata-shi, Osaka

20
Transportation
million yen

100.0(100.0)

None

None

None

None

57
Malacca, Malaysia
millionringgitBinh Duong,
256.4
Vietnambillion dong
255.8West Java,billionIndonesia
rupiahChofu-shi, Tokyo
Yamato-shi,
Kanagawa
Shibuya-ku,
Tokyo
Takehara-shi,
Hiroshima

Nantong Kewpie
Corporation(Note 1)

Jiangsu Province,
China

Mosso Kewpie
Poland Sp. z o.o.
(Note 1)
Fresh Delica
Network. Co., Ltd.
TO AD KEWPIE CO.,LTD. (Note 5)
Hisamatsu Transport
Corporation

Production and sale ofcondiments

70.0

Employees

594
million yen

None

None

Production and sale ofcondiments

80.0

Employees

3113
million yen

None

None

Production and sale ofcondiments

60.0
(3.5)

Employees

3

None

None

None

D or A
Employees
D or A
Employees

2
4
2
3

None

Purchase of raw materials

Leases ofoffices

Sale of products

None

4

100
Sale of egg andmillion yen processed egg
100
million yen
10million yen
915
million yen
184millionyuan

100.0(51.0)

Processing and sale offresh vegetables

51.0

Mail-order business

70.0

Employees

Production and sale ofcanned foods

44.6[11.1]

None

Employees

5

1,296
million yen

None

None

100.0
(100.0)

Employees

3

None

None

None

50.0

Employees

2

None

Advertising agency services

Leases ofoffices

100.0

None

None

None

None

None

None

None

20
Transportation
million yen

Shibuya-ku,
Tokyo

Agency service for4
advertising, publicity,
million yen
and exhibitions

Guangdong
Province, China

Kewpie Philippines,
Inc.

Manila, Philippines

100
millionyuan
50
million
peso

None

100.0

Akishima-shi,
Tokyo

Guangzhou Kewpie
Corporation

Liabilities forguarantee
None
238
million yen

5160,300
Production and sale ofthousandcondiments
Polish zloty

196
millionyuan

Purchase of products

Leases ofoffices
Leases ofoffices1

Puchały, Poland

Beijing, China

None

Sale of products

Employees

100.0

Ayaka-gun, Utazu20
Transportationcho, Kagawa
million yen

306
million yen
405
million yen

D or A

Production and sale ofvinegar, processed egg
and salads

Kewpie China
Corporation(Note 1)Other: 1

20
Production and sale ofmillion yen delicatessen foods

44.0

Financial management
and business
management of theCompany’s local
subsidiaries in China

100.0

Production and sale ofcondiments
Sale of condiments

D or A

1

Employee1

100.0

Employee

1

None

None

None

100.0

Employees

3

None

None

None

Outline of the Company 7(Notes) 1. Kewpie Egg Corporation, K.R.S. Corporation, Kanae Foods Co., Ltd., Nantong Kewpie Corporation, Mosso Kewpie Poland Sp. z o.o., and Kewpie China
Corporation are classified under Japanese tax law as tokutei kogaisha, a special category of subsidiary.
2. The figures in parentheses under “Percentage of our voting rights” indicate the proportion of indirect ownership and are included in therespective figures above.
3. The companies file their own annual securities report to the Commissioner of the Financial Services Agency.
4. Net sales of K.R.S. Corporation (excluding sales from intra-group transactions) exceed 10% of the Company’s consolidated net sales. However,specific details regarding its major profit/loss information are not published here as K.R.S. Corporation files its own annual securities reportto the Commissioner of the Financial Services Agency.
5. K.R.S. Corporation, KEWPIE (THAILAND) CO., LTD., Aohata Corporation and TO AD KEWPIE CO., LTD. are treated as subsidiaries, eventhough the voting rights held by the Company as a percentage of total voting rights are 50% or less, in view of the substantial control exerted
over their management.
6. In the “Percentage of our voting rights” column, the figures shown in square brackets indicate the percentage of voting rights of closely
related persons or persons whose consents are obtained, which are excluded from the respective figures above.

Equity-method affiliates
Trade name

Address

Paid-in
capital/equityinvestment

Businesslines

Summit Oil Mill
Co., Ltd.

Mihama-ku,
97
Production of
Chiba-shi, Chiba million yen vegetable oil

Kunimi Nosankako
Co., Ltd.

Kunisaki-shi,
Oita

Production and sale80of frozen and chilled
million yen
foods

Chofu-shi,Tokyo

Planning,
development, sale,90
maintenance andmillion yen operational supportof computer
systems

To Solutions Co., Ltd.

Relationship with the Company
Percentage ofInterlocking
directors
Financeour voting
Operating(D) or corporate
from therightstransactions
auditors (A)Company
49.0

20.1

D or A

1

Employees

2

Employees

2

Employee

20.0

1

Lease
transactions

None

Sale of products andpurchase of raw materials

None

215
millionyen

Purchase of products

None

None

Consignment ofcalculation work, etc.

Leases ofoffices andrental of
officeequipment

Other associated company
Trade name

Address

NAKASHIMATO CO.,LTD.

Shibuya-ku,
Tokyo(Note)

Paid-in
capital/equityinvestment

Business
lines

50
Sale of various
million yen processed foods

Percentage of
their voting
rights(Note)
16.2(5.7)

Relationship with the Company
Interlocking directors(D) or corporate
auditors (A)D or A

2

Financefrom theCompany
None

Operatingtransactions
Purchase of products, etc.

Leasetransactions
Leases ofoffices

The figure in parentheses under “Percentage of their voting rights” indicates the proportion of indirect ownership by NAKASHIMATO and isincluded in the respective figure above.

4. Employees
The Company and its consolidated subsidiaries(As of November 30, 2018)

Number of employees
14,808(9,843)(Note)The employee figure indicates registered regular employees and long-term special contract employees, excluding the Group employees dispatchedoutside the Group but including workers from outside employed within the Group on dispatch. The figure in parentheses indicates the annual
average number of short-term contract non-regular employees and workers hired on a daily, weekly or seasonal basis, and is excluded from thefigure above.

The labor union
Formed on July 14, 1962, the Kewpie labor union is the main labor union of the Group.
The labor-management relations are stable and there are no matters that should be reported.

8 Facilities and Equipment

II. Business Operations
1. Management Policy, Business Environment, Tasks Ahead, Etc.
Forward-looking statements included in this section are based on the Group’s judgment of
information available as of the end of the current fiscal year.
Basic policies of Company management
The Group’s mission is to unceasingly contribute to better and healthier dietary lifestyles of people
from around the world premised on the notions of good taste, kindness and uniqueness, acting as acorporate group in the food sector which forms an essential part of human existence.
We will remain committed to our insistence on the highest product quality, which has been themost fundamental concern of the Group since its establishment. At the same time, every one of our
executives and employees will remain continually aware of our aims that involve wholeheartedly
providing selective products and services that only the Kewpie Group can provide, and putting suchaims into practice.
Medium- to long-term business strategies, business environment, tasks ahead, etc.
Amid domestic lifestyle changes, including a rise in single-person households and a growing
number of women entering the work force, consumer demand is rising for simple and ready-toserve foods, and purchasing channels, such as those using the Internet, are diversifying. Turning tomarkets outside Japan, we are seeing changes in dietary habits and lifestyles. These changes arelargely attributable to the increase in disposable incomes in developing countries and the growing
trend toward Westernized foods.
In 2019, amid this rapidly changing environment, the Group will be celebrating 100 years since
its foundation. At this juncture, we have formulated the “Kewpie Group 2030 Vision” as the Group’s
long-term vision with the aim of achieving ongoing growth over the next century. Under the 2030
Vision, the Group embraces a single common purpose and broadly evokes a sense of empathy byextending the areas in which we can contribute to the world and engaging in initiatives aimed atsolving social issues.
In addition, we have formulated a Medium-term Business Plan that covers three years startingfrom the fiscal year ending November 30, 2019. Working to maintain growth in Japan and accelerate
growth overseas, we have set forth three management policies (promoting our products, centeringon the three businesses, as integral parts of our daily meals in Japan; accelerating business expansion
overseas, particularly in China and South East Asia; and strengthening our business foundation for
better adaptability to changes to the business environment).

Facilities and Equipment 9[2019 to 2021 Medium-term Business Plan]
A. Management policies and key initiatives
Domestic<Promoting our products, centering on the threebusinesses, as integral parts of our daily meals>
 Build optimal production system using crossbusiness functions.
 Expand sales opportunities by using andexploiting sales channels.
 Make use of original materials and technologies
to achieve new value.
(Three businesses are “Condiments and processed
foods business,” “Salad and delicatessen business,”and “Egg business.”)

Overseas<Accelerating business expansion, particularly in
China and South East Asia>
 All Areas
Expand and cultivate consumers’ salad needs
with focus on mayonnaise and deep-roasted
sesame dressing.
 Area Specific (Focus Areas: China and South
East Asia)
Develop businesses compatible to the local
needs of each area and strengthen category
type strategies and the business foundation.

<Strengthen the business foundation for better adaptability to environmental changes>
 Initiatives for the environment
 Effective utilization of resources: Utilization of unused parts of vegetables, etc.
 Reduction in product waste: SCM optimization, etc.
 Reduction of CO2 emissions: Improved efficiency of production, distribution, etc.
 Initiatives for society
 Promoting longer, healthier lives: Food lifestyle proposals involving salad and eggs, etc.
 Promoting healthy minds and bodies in children: Food educational activities with focus on
salads and eggs, etc.
 Promotion of diversity
 Improvement of governance Innovation of core systems
B. Performance targets (FY 2021)
Net sales
Operating income
Ordinary income
Profit attributable to owners of parent
ROA (Ordinary income to total assets)
ROE (Return on equity)(Billions of yen unless otherwise stated)
585.0
38.0
39.0
21.4
8.5%
8.5%

C. Domestic and overseas net sales and operating income targets (FY 2021)(Billions of yen)
Net sales
Operating income
Domestic
519.1
39.0
Overseas
65.9
6.3
Company-wide expenses
—
(7.3)
Total
585.0
38.0

10 Facilities and Equipment

D. Net sales and operating income targets by segment (FY 2021)
The changes to business segments were implemented from the fiscal year ending November 30,
2019.
 All business operations of the Processed foods business except the Aohata Corporation
portion have been transferred to the “Condiments products business” and renamed the“Condiments and processed foods business.”
 The Aohata Corporation portion of the “Processed foods business” has been split off as the“Fruit solution business.” Leasing related transactions that had been included in the “Distribution system business”
have been transferred to “Common business operations,” and this segment has beenrenamed “Distribution business.”(Billions of yen)
Business category
Net sales
Operating income
Condiments and processed foods
202.7
22.8
Salad and delicatessen
96.5
4.7
Egg
106.3
8.5
Fruit solution
20.5
1.1
Fine chemicals
10.0
1.6
Distribution
143.0
5.2
Common business operations
6.0
1.5
Company-wide expenses
—
(7.3)
Total
585.0
38.0
(Note)

Company-wide expenses are expenses that cannot be allocated to any specific business(headquarters expenses, etc.).

Facilities and Equipment 11(Fundamental policy on control of the Company)(1) Fundamental policy on what the person(s) should be like to control the determination of thefinancial and business policies of the Company
The Company considers that in the event that its shares are to be purchased for the purpose of alarge purchase, it should be left to final judgment of the shareholders whether or not the Company
will agree thereto, and does not deny any import or effect of vitalization of its corporate activities
through a change in the controlling interest.
However, for the management of the Company and the Group, it is essential to have a goodunderstanding of a broad range of know-how and accumulated experience, as well as the relationships fostered with its stakeholders, including customers and employees. Without such goodunderstanding, it would be impossible to properly judge the share-holder value that may be raisedin the future. We, who are responsible for management as receiving a mandate from theshareholders, have focused our efforts on IR activities to get the fair value of the shares of theCompany understood by the shareholders and investors. However, in the event of a sudden large
purchase of the shares, for the shareholders who are required to properly judge whether the pricefor the acquisition offered by the purchaser is adequate or not in a short period, we consider it vitalto be provided with adequate and sufficient information from both the purchaser and the Board of
Directors of the Company. Additionally, for the shareholders in considering whether or not tocontinue holding the shares of the Company, we believe that such information as the impact of theacquisition on the Company, the details of the management policy and business plans when thepurchaser proposes to participate in the management of the Company, past investing activities ofthe purchaser and the opinion of the Board of Directors as to the acquisition will be important formaking a decision.
In consideration of these factors, we have judged that any prospective purchaser of the shares of
the Company for the purpose of a large purchase should be required to provide with the Board of
Directors in advance such necessary and sufficient information as to allow the shareholders toconsider the acquisition in accordance with some reasonable rules prescribed by the Company andpublicized in advance, and to commence the acquisition only after the lapse of a specified evaluation
period for the Board of Directors.
In fact, some large purchase may cause permanent damage to the Company and materially injure
its corporate value and the common interests of its shareholders. We, responsible for the
management of the Company, recognize that we are naturally responsible for protecting against
such large purchase the fundamental philosophy and brands of the Company and the interests of
its shareholders and other stakeholders.
To fulfill such responsibility, the Board of Directors recognizes that with regard to any purchaseof shares for the purpose of a large purchase (or any proposed purchase), it is necessary to carefully
investigate and judge the effect that such purchase (or such proposed purchase) may have on thecorporate value of the Company and the common interests of its shareholders, in consideration of
the nature of business, future business plans and past investing activities of the purchaser, etc.
Hence, we believe that to protect the corporate value of the Company and the common interestsof its shareholders, it is necessary for the Board of Directors to take measures it considers adequate
in accordance with some reasonable rules prescribed by the Company and disclosed in advance.
(The aforementioned fundamental policy on what the person(s) should be like to control thedetermination of the financial and business policies of the Company will be referred to as the“Fundamental Policy” hereinafter.)(2) Special measures to facilitate the implementation of the Company’s Fundamental Policy
A. Special measures to facilitate the implementation of the Company’s Fundamental Policy
To encourage many investors to invest in the Company on a continued, long-term basis, it has
implemented the following measures to facilitate the enhancement of its corporate value and thecommon interests of its shareholders:a) Institution of the Group’s Medium-term Business Plan

12 Facilities and Equipment

The Group has instituted the three-year Medium-term Business Plan starting from the fiscal
year ending November 30, 2019 to further enhance its corporate value.
Under the Medium-term Business Plan, the Group aims to maintain growth in Japan andaccelerate growth overseas, while also strengthening its business foundations to ensure future
growth particularly by engaging in initiatives aimed at solving social issues with respect toour changing society.
In Japan, we will take steps to improve our profit generating capabilities by promoting our
products as integral parts of daily meals, centering on the Condiments and processed foods
business, the Salad and delicatessen business, and the Egg business. Our efforts to such ends
will involve enhancing our cost competitiveness by building an optimal production systemand streamlining production, and improving production capacity to ensure future growth.
We will also seek more extensive sales opportunities by making reciprocal use of sales
channels in our respective businesses and expanding into new sales channels, while also
creating new value drawing on our original technologies.
Overseas, we will improve our profit generating capabilities by increasing sales which will
involve expanding consumers’ salad needs with focus on mayonnaise and deep-roasted
sesame dressing, while at the same time making proposals and carrying out development
geared to circumstances in respective geographic areas, particularly in China and Southeast
Asia.
b) Streamlining of corporate governanceTo continuously increase its corporate value and the common interests of its shareholders
through efficient and sound management, the Group regards the streamlining of its
organizations, schemes and systems of management and timely and proper implementationof necessary measures as one of the most important management challenges.
To more clearly define the management responsibility for each fiscal year and establish amanagement structure that can respond to changes in the business environments with agility,
the Company sets the term of office of directors to one year. Additionally, to further strengthen
its audit system, the Company employs four corporate auditors (members of the Audit &Supervisory Board), including two outside corporate auditors.
B. Assessment of the measures noted in above (2) A. by the Board of Directors of the Company andreasons for the assessment
The Board of Directors of the Company assesses the measures as follows. The measures noted inabove (2) A. a) and b) increase the Group’s corporate value and the common interests of its
shareholders and consequently decrease the risk of appearance of any Large Purchaser who maymaterially injure the Company’s corporate value and the common interests of its shareholders.
So, the measures live up to the Fundamental Policy. In addition, it is clear that the measures do
not injure the common interests of the shareholders and is not contemplated to maintain thepositions of directors or corporate auditors (the “officers”) of the Company because suchmeasures naturally increase the Group’s corporate value.
(3) Measures to prevent the determination of the financial and business policies of the Company frombeing controlled by any inadequate person in consideration of the Fundamental Policy (a defense
plan against large purchase actions of the shares of the Company (takeover defense plan))
A. Measures by the defense plan against large purchase actions of the shares of the Company(takeover defense plan)
The Company decided by the resolution at the meeting of the Board of Directors of the Company
held on January 25, 2017 to continue to adopt the defense plan against large purchase actions(hereinafter referred to as the “Defense Plan”) as measures to prevent the determination of thefinancial and business policies of the Company from being controlled by any person consideredinadequate as described by the Fundamental Policy; subject to approval of the 104th Ordinary

Facilities and Equipment 13

General Meeting of Shareholders on February 24, 2017. The continuous adoption of the Defense
Plan was approved at the 104th Ordinary General Meeting of Shareholders.
The outline of the Defense Plan is as follows:a) Coverage of purchase actions
The Defense Plan covers a purchase of shares and other securities of the Company to makethe ratio of voting rights of any specified shareholder group 20% or more, or a purchase ofshares and other securities of the Company resulting in making the ratio of voting rights ofany specified shareholder group 20% or more (whether by market trading, by takeover bid(TOB) or otherwise; however any purchase action agreed to by the Board of Directors inadvance will not be covered by the Defense Plan).
b) Particulars of the Large Purchase Rules
The Company will institute Large Purchase Rules under which any Large Purchaser cancommence a large purchase action only after (i) Large Purchaser provides the Board of
Directors of the Company with necessary and sufficient information on the large purchaseaction in advance and (ii) in principle, 60 days (in case of purchase of all shares of theCompany by TOB for cash (in yen) only) or 90 days (in other cases of large purchases), whichis the period for the Board of Directors of the Company to evaluate, examine, negotiate, form
opinions, make alternative plans, determine whether it is necessary to confirm shareholders’intention and determine whether to take counter measures (hereinafter referred to as“Directors’ Evaluation Period”), pass.
With regard to the Large Purchase Rules, the Company will (iii) establish an Independent
Committee to ensure the Defense Plan to be implemented properly and prevent arbitrary
judgments by the Board of Directors as far as possible and (iv) follow procedures for confirming the intention of the shareholders as the necessity arises from the perspective ofrespecting their intention. The Independent Committee shall consist of at least three members,
who shall be appointed from among outside experts independent of the management
responsible for execution of business of the Company, outside directors of the Company andoutside corporate auditors of the Company, to enable them to make fair and indifferent
judgments. To confirm the intention of the shareholders, a resolution shall be adopted at a
General Meeting of Shareholders under the Companies Act of Japan. In the event that such
General Meeting of Shareholders is held, the Board of Directors shall, pursuant to theresolution adopted thereat, trigger, or not trigger, the Defense Measure against the proposedlarge purchase action as the case may be. The date of the General Meeting of Shareholders
shall be fixed within the initially fixed Directors’ Evaluation Period, in principle. However, in
any unavoidable circumstance where it takes time procedurally to convene a General Meetingof Shareholders or otherwise, the Board of Directors may extend the Directors’ Evaluation
Period for 30 days upon recommendation from the Independent Committee.
c) Defense Measure when a large purchase action is taken
In case the Large Purchaser observes the Large Purchase Rules
In case the Large Purchaser observes the Large Purchase Rules, the Board of Directors will
not trigger the Defense Measure against the large purchase action, in principle. Whether
or not to agree to the purchase proposal by the Large Purchaser will be left to the judgmentof the respective shareholders.
However, if the Large Purchaser is considered not to seriously aim for reasonable
management but the large purchase actions by the Large Purchaser is considered to cause
permanent damage to the Company, whereby materially injuring its corporate value andthe common interests of its shareholders, the Board of Directors may exceptionallyimplement any appropriate measure to protect the interests of its shareholders.
In case the Large Purchaser does not observe the Large Purchase Rules
In case the Large Purchaser does not observe the Large Purchase Rules, in order to protect
the corporate value of the Company and the common interests of its shareholders, theBoard of Directors will trigger the Defense Measure, including the issuance of stock14 Facilities and Equipment

acquisition rights, as authorized by the Companies Act and other laws or ordinances andthe Articles of Incorporation of the Company, against the large purchase action by taking
into consideration the necessity and adequacy thereof. The Board of Directors will
determine whether or not the Large Purchaser observes the Large Purchase Rules andwhether or not it is appropriate to trigger the Defense Measure, by reference to theopinions of third-party experts and by respecting recommendations from the Independent
Committee to the maximum extent possible.
Defense Measure
The Company will adopt a concrete measure that the Board of Directors assesses as themost appropriate at the time among measures, including an allocation of stock acquisitionrights without compensation, which are authorized by the Companies Act and the Articles
of Incorporation of the Company by taking into consideration the necessity and adequacy
thereof. In the case that the Company makes an allocation of stock acquisition rights
without compensation, the Company will set conditions that, for example, the exercise of
the stock acquisition rights by the Large Purchaser is rejected. It is not contemplated thatany cash will be delivered as a consideration for the acquisition of the stock acquisitionrights held by any person not having the right to exercise the stock acquisition rights.
Cessation of the triggering of the Defense Measure
Even after the determination to trigger the Defense Measure, in the event that the Large
Purchaser revokes or alters the large purchase action or otherwise the Board of Directors
judges it inappropriate to trigger the Defense Measure, it may alter or cease the triggeringof the Defense Measure by respecting recommendations from the Independent Committee
to the maximum extent possible.
d) Impacts on the shareholders and investors
Impact of the Large Purchase Rules on the shareholders and investors
We believe that the institution of the Large Purchase Rules, which are intended to help theshareholders and investors make appropriate investment judgments, will benefit theshareholders of the Company and investors.
Impact on the shareholders and investors when the Defense Measure is triggered
In case the Large Purchaser does not observe the Large Purchase Rules, the Board of
Directors may trigger the Defense Measure, as authorized by the Companies Act and otherlaws or ordinances and the Articles of Incorporation of the Company, to protect thecorporate value of the Company and the common interests of its shareholders. However,under the scheme of the Defense Measure, it is not assumed that the shareholders(excluding the Large Purchaser against which the Defense Measure is triggered) of theCompany will incur any specific loss on their legal rights or economic interests. In theevent that the Board of Directors ceases to issue stock acquisition rights or acquire theissued stock acquisition rights without compensation, the stock value per share will not
be diluted. Hence, any shareholder or investor who trades in the shares, assuming thatthe stock value of the Company will be diluted on or after the ex-date relating to the freeallocation of stock acquisition rights may incur an unexpected loss due to stock pricemovements.
Procedures to be followed by the shareholders when the Defense Measure is triggered
In the event that the Board of Directors of the Company determines to make a freeallocation of stock acquisition rights as a vehicle for the Defense Measure, stockacquisition rights shall be allocated without compensation to shareholders recorded in theshareholder register of the Company as of the record date for the allocation of the stockacquisition rights without compensation for which the Company gave public notice.
Accordingly, for the shareholders to receive an allocation of stock acquisition rights, theymust be recorded in the final shareholder register as of the record date. For further detailsof the methods of allocation, the exercise of stock acquisition rights and the acquisition

Facilities and Equipment 15

thereof by the Company, information will be disclosed or notified to the shareholders after
the determination of the Board of Directors with regard to the Defense Measure.
e) Effective period of the Defense Plan
The Defense Plan shall expire at the close of the 107th Ordinary General Meeting of
Shareholders to be held no later than February 29, 2020.
B. Assessment of the Defense Plan noted in above (3) A. by the Board of Directors and reasons forthe assessmenta) The Defense Plan’s compliance with the Fundamental Policy
The Defense Plan stipulates the particulars of the Large Purchase Rules, the defense plan incase of a large purchase action, the establishment of an Independent Committee and theimpacts on the shareholders and investors.
The Defense Plan requires any Large Purchaser to provide the Board of Directors withnecessary and sufficient information on a large purchase action in advance and commence thelarge purchase action only after the lapse of the Directors’ Evaluation Period and specifies thatthe Board of Directors may trigger any defense measure against the Large Purchaser not
observing the Large Purchase Rules.
The Defense Plan also stipulates that even in the event that the Large Purchaser observes
the Large Purchase Rules, if its large purchase action is considered by the Board of Directors
to materially injure the corporate value of the Company and the common interests of its
shareholders, the Board of Directors may trigger against the Large Purchaser any defense
measure considered appropriate to protect the corporate value of the Company and thecommon interests of its shareholders.
Hence, we believe the Defense Plan complies with the Fundamental Policy.
b) The Defense Plan’s non-injuring of the common interests of the shareholders of the Company
As described in above (1) “Fundamental policy on what the person(s) should be like to control
the determination of the financial and business policies of the Company,” the Fundamental
Policy is based on respect for the common interests of its shareholders. The Defense Plan,
which is designed according to the philosophy of the Fundamental Policy, is intended toafford the opportunities to the shareholders of the Company to receive information necessary
for them to judge whether or not to agree to a large purchase action, have the Board of
Directors put forward its opinion thereon and have any alternative proposal offered to them.
The Defense Plan will allow the shareholders of the Company and investors to makeappropriate investment judgments. Thus, we believe that the Defense Plan will not injure thecommon interests of the shareholders of the Company but rather benefit their interests.
In addition, the effectuation and extension of the Defense Plan is subject to the approval of
the shareholders. The Defense Plan has no dead-hand clause (a clause that prevents cancelinga takeover defense measure if any member of the Board of Directors that adopted the measureis replaced) or slow-hand clause (a clause that prevents canceling a takeover defense measure
for a specified period even if a majority of the members of the Board of Directors that adopted
the measure are replaced) and consequently, the shareholders of the Company can abolish the
Defense Plan whenever they wish to do. Thus, we believe that the Defense Plan gives
assurance that the common interests of the shareholders of the Company will not be injured.
c) The fact that the Defense Plan is not intended to maintain the position of the officers of theCompany
Based on the principle of leaving the final judgment to the shareholders of the Company as towhether or not to agree to a large purchase action, the Defense Plan allows the Board of
Directors to request compliance with the Large Purchase Rules and trigger a defense measure
to the extent necessary to protect the corporate value of the Company and the common
interests of its shareholders. The Defense Plan discloses the conditions on the triggering ofdefense measures by the Board of Directors in advance and in details and any defense measureby the Board of Directors shall be triggered in accordance with the provisions of the Defense

16 Facilities and Equipment

Plan. The Board of Directors cannot effectuate or extend the Defense Plan by itself, but subject
to the approval of the shareholders of the Company.
In addition, in triggering a defense measure, the Board of Directors shall seek advice fromthird-party experts whenever necessary in making any important decision on the Defense
Policy, and consult with the Independent Committee consisting of the members independentof the management responsible for execution of business and respect recommendations fromthe Independent Committee to the maximum extent possible. Furthermore, the Board of
Directors can follow procedures for confirming the intention of the shareholders as thenecessity arises from the perspective of respecting their intention. The Defense Plan contains
procedures to ensure the proper operation thereof by the Board of Directors.
Thus, we believe that the Defense Plan clearly is not contemplated to maintain the positionof the officers of the Company.

2. Operational Risks
Among the various factors relating to the business operations and financial information of the Groupdescribed in the Annual Securities Report that may exert a significant effect on the decisions of investors
are the following matters.
The Group, recognizing the risks inherent in the Group’s business, takes all reasonable measures toinhibit or avoid the occurrence of risks. An overview of the risks involved is given below, but this is notintended to be an exhaustive list of all risks attendant on the Group’s business operations.
Forward-looking statements included in this section are based on the Group’s judgment of
information available as of the end of the current fiscal year.
Market trends in the condiments for salads
Condiments for salads (mayonnaise and dressings) is the product category with the highest degreeof contribution to both sales and profits for the Group.
Consequently, in the event of a shrinkage in the market for condiments for salads as a result of adecline in demand, or in the event that the market share of the Company’s products falls sharply
owing to competition with other manufacturers’ products, the business performance and financial
position of the Group would be severely impacted. In the short term, the volume of consumption of
condiments for salads is affected by fluctuations in the prices of vegetables.
To reduce such effects, the Group is working to develop and expand the scale of its other productcategory.
Regarding condiments for salads, while putting efforts into proposing new occasions for eating
and menus, and developing and updating products to suit consumer preferences such as
responding to health needs, we continued to cut costs through initiatives involving collaboration
between business units. In these ways, we aim to stimulate the market and uncover new areas oflatent demand, and at the same time strengthen our competitiveness. We are also expanding ourbusiness in China and Southeast Asia, which have good prospects for future growth.
Fluctuations in the prices of principal ingredients
The principal ingredients from which the products of the Group are made consist of shell eggs andedible oils.
Fluctuations in the prices of eggs are attributable to changes in the number of eggs laid, which,in turn, depends on the number of egg-laying hens as well as changes in demand due to varying
household buying patterns. In the case of edible oils, price changes are caused by fluctuations in themarket prices of soybeans and/or rapeseed, movements on the foreign exchange market, andchanges in the balance of supply and demand.
The Group’s procurement of eggs and edible oils entails measures to ensure that we have thenecessary volume, at stable prices. Accordingly, our procurement of eggs is conducted under aFacilities and Equipment 17

combination of annual fixed-volume contracts with major egg producers, fixed-price contracts andsupplementary spot contract purchases on the open market. Since we have long-establishedrelationships of trust with major producers of edible oils, we do not buy oil through spot purchases,
but under long-term contracts such as forward trading.
In the Egg products business, we also make constant effort to improve our response tofluctuations in the eggs market prices by increasing the correlation between our product prices andegg prices.
We cannot, however, rule out the possibility of sharp rises in market prices, and in such an event,there is a possibility that the business performance and financial position of the Group would be
adversely affected.
Product safety and other hygiene and health related concerns
To prevent the occurrence of incidents causing damage to the health of consumers, such as theinsertion of foreign matter into the Group’s products, and false or mistaken indications on productlabels, insistence on the highest product quality has been the most fundamental concern of theGroup since its establishment. In line with this, we rigorously and systematically pursue
enhancement of product quality assurance systems through the acquisition of Food Safety System
Certification (FSSC 22000 and others), trans-group quality monitoring, product quality assurance
and traceability systems that make use of factory automation, self-monitoring, and construction ofquality standard control system for procured ingredients focused on insistence on meeting oursafety and hygiene standards.
On the other hand, we place great importance on ensuring a high level of awareness andunderstanding regarding product quality among our employees. To this end, the Group helps
employees acquire necessary knowledge and technology and instills them an insistence on thehighest product quality by offering them training opportunities such as on-the-job training andtraining sessions. Accordingly, the Group takes appropriate measures to provide safe and highquality products, which is the foundation of the persistent business development.
Nevertheless, the Group’s products may be affected by quality problems of a wider social scale
and thus beyond the control of the Group. In such cases, the business performance and financial
position of the Group would unavoidably be subject to an adverse impact of major proportions.
Social turmoil from contingencies such as natural disasters or diseases in areas of operation
The Group has business operations in Japan and overseas areas including China, the US andSoutheast Asia. The following contingencies, such as natural disasters or diseases, should they occur,
could cause worse-than-expected social turmoil, resulting in such problems as damage tomanufacturing or distribution facilities, etc. or difficulties in obtaining raw materials, energy or thehuman resources necessary for operations. This could result in deterioration in the Group’s
production and sales capabilities, significantly affecting the Group’s business performance andfinancial position.
 Large-scale natural disasters such as severe earthquakes or torrential rainfall Epidemics of highly virulent, infectious diseases
 Large-scale incidents not caused by natural disasters, such as sustained, wide-ranging electric
power cuts
 Political problems such as terrorism or disputes
Relationship with K.R.S. Corporation, a consolidated subsidiary
Net sales of the Distribution system business for the current fiscal year amounted to ¥138.3 billion(24.1% of total net sales), and operating income came to ¥5.6 billion (16.9% of total operating income).
This growth was mostly attributed to K.R.S. Corporation and its subsidiaries.
The Company currently holds 46.0% of the total voting rights of K.R.S. Corporation (this figure
includes voting rights attendant on shares held indirectly; inclusive of voting rights held by persons
with a close relationship to the Company or persons whose consents are obtained, the total

18 Facilities and Equipment

percentage is 52.0%). In the event of a decline in the percentage of the Company’s voting rights inthe future, or changes in the personal and/or the trading relationship between the two companies,
K.R.S. Corporation may lose the status of consolidated subsidiary of the Company. It is estimatedthat such a development would have a significant effect on the business performance and financial
position of the Group.
In order that the Group continues to grow in the future, the management of the Company
recognizes that it is necessary to secure an efficient and competitive foods distribution systemservice, as high-quality storage and delivery of food products is a key element in realizing provisionof safe and high-quality products that forms the basis of the Group’s business.
That being so, we are confident that it will contribute to raising the corporate value of the Group
as a whole to maintain the status of K.R.S. Corporation as a consolidated subsidiary.

Facilities and Equipment 19

3. Management Analysis of Financial Position, Operating Results and Cash Flows
Overview of operating results, etc.
The overview of the Group’s financial position, operating results and cash flows (the “operating
results, etc.”) for the current fiscal year is as follows:
A. Financial position and operating results
 General
During the fiscal year ended November 30, 2018, the Japanese economy saw a trend of modest
recovery due to improvements in corporate earnings and the employment and income environment.
In the food industry amid an environment where changing lifestyles have led to greater
consumer demand for simple/ready-to-serve meals such as ready-made foods, fluctuations invegetable prices due to unfavorable weather conditions and natural disasters were the major
impacts on consumer spending. In addition, signs of revisions to product pricing were also apparent
due to increases particularly in personnel costs associated with the labor shortage, transportation
and warehousing expenses, and raw material prices.
The food distribution industry also remained subject to a tough business environment due tofactors that included escalating transportation costs against a backdrop of rising fuel prices andmanpower shortages, in addition to adverse effects from successive natural disasters.
 Status of the Group (consisting of the Company and its consolidated subsidiaries) Net sales
Despite the impact of a decline in the domestic shell egg market, due to increased sales of the cut
vegetables and delicatessen products for the ready-made foods market and strong sales in theDistribution system business, consolidated net sales increased by ¥11,837 million (2.1%) year on
year to ¥573,525 million.
 Profit
Despite the impact of an increase in costs including payroll expenses, operating income increasedby ¥1,806 million (5.8%) year on year to ¥33,067 million, ordinary income increased by ¥1,838
million (5.7%) year on year to ¥34,349 million, and profit attributable to owners of parent
increased by ¥221 million (1.2%) year on year to ¥18,320 million as a result of an increase in the
US’s dried egg market and growth in sales of value-added products.

20 Facilities and Equipment

 Business overview by segment[Breakdown of net sales](Millions of yen unless otherwise stated)

Previous fiscal year Current fiscal year
(From December 1, 2016 (From December 1, 2017
to November 30, 2017)
to November 30, 2018)

Condiments products
Egg products
Delicatessen products
Processed foods
Fine chemical products
Distribution system
Common business operations
Total

150,435
100,463
115,50746,604
10,593
131,237
6,847
561,688

153,394
100,895
118,323
46,76910,035
138,2635,843
573,525[Breakdown of operating income]Change (amount)
2,959
432
2,816
165
(558)
7,026
(1,004)
11,837

Change (ratio)
2.0%
0.4%
2.4%
0.4%
(5.3)%
5.4%(14.7)%
2.1%(Millions of yen unless otherwise stated)

Previous fiscal year Current fiscal year
(From December 1, 2016 (From December 1, 2017
to November 30, 2017)
to November 30, 2018)

Condiments products
Egg products
Delicatessen products
Processed foods
Fine chemical products
Distribution system
Common business operations
Total

15,296
4,368
3,847
199
864
5,892
792
31,261

14,366
6,047
4,415
637
1,269
5,581
750
33,067

Change (amount)
(930)
1,679
568
438
405
(311)
(42)
1,806

Change (ratio)(6.1)%
38.4%
14.8%
220.1%
46.9%(5.3)%(5.3)%
5.8%

Condiments products
 Sales increased due to overseas strong sales of mayonnaise and dressings.
 Operating income decreased due to sluggish domestic sales resulting from the impact of a rise invegetable prices and an increase in depreciation and amortization.
Egg products
 Sales increased in part due to an increase in the US dried egg market, despite the effects of adecline in the domestic shell egg market.
 Operating income increased due to growth in value-added products in domestic market, as well
as a recovery in the US.
Delicatessen products
 Sales increased due to growth in sales of cut vegetables resulting from expansion in the stores
handling the products, as well as expansion into new sales channels.
 Operating income increased due to expansion into new sales channels and cost improvements.
Processed foods
 Sales increased due to the growth of Marugotokajitsu products, pasta sauce, and Hokkaido corn,among other products.
 Operating income increased due to growth in value-added products and a review of unprofitableproducts.
Fine chemical products
 Sales decreased due to a decline in sales of EPA for medical use.
 Operating income increased due to growth in functional hyaluronic acid, primarily in overseas
markets.
Distribution system
 Sales increased as a result of progresses made in the expansion of service areas with existingcustomers and an increase in consolidated subsidiaries.
 Operating income decreased due to higher procurement costs for fuel and vehicles, as well as theimpact of natural disasters.

Facilities and Equipment 21

Common business operations
 Both sales and operating income decreased due to a decrease in sales of production equipment
to food manufacturers.
 Status of financial position
 Total assets increased by ¥2,166 million year on year to ¥421,373 million.
This was mainly due to a ¥8,875 million increase in cash and deposits, a ¥2,500 million decrease
in securities, a ¥6,425 million decrease in buildings and structures, a ¥2,581 million increase inmachinery, equipment and vehicles, a ¥6,652 million increase in construction in progress, a ¥2,545
million decrease in goodwill, and a ¥4,822 million decrease in investment securities.
 Total liabilities decreased by ¥502 million year on year to ¥155,273 million.
This was mainly due to a ¥3,490 million decrease in notes and accounts payable –– trade and a¥2,770 million increase in accrued income taxes.
 Net assets increased by ¥2,668 million year on year to ¥266,100 million.
This was mainly due to a ¥12,848 million increase in earned surplus and purchase of treasury
stock of ¥9,256 million.
B. Status of Cash flows
Cash and cash equivalents at the end of the current fiscal year amounted to ¥47,970 million, which
represents an increase of ¥6,559 million from the end of the previous fiscal year.
Status of cash flows is as follows:
Net cash provided by operating activities came to ¥41,778 million for the current fiscal year, up
from ¥27,234 million for the previous fiscal year. This was the result of profit before income taxes of¥33,586 million, depreciation and amortization of ¥18,215 million and income taxes paid of ¥9,229
million.
Net cash used in investing activities amounted to ¥20,199 million, compared with ¥31,421 million
used in the previous fiscal year. This was the result of purchases of tangible fixed assets of ¥29,217
million and proceeds from transfer of business of ¥8,309 million.
Net cash used in financing activities amounted to ¥15,293 million, compared with ¥4,010 million
provided in the previous fiscal year. This was the result of dividend payments of ¥5,514 million andpurchase of treasury stock of ¥9,278 million.
(Note) Amounts shown in “II. Business Operations” are exclusive of consumption taxes.
Analysis and discussions of the status of the operating results, etc. from the viewpoint ofmanagement
The contents of analysis and discussions of the status of the Group’s operating results, etc., from theviewpoint of management are as follows.
Forward-looking statements included in this section are based on information available as of theend of the current fiscal year.
A. Summary of significant accounting policies and estimates
The consolidated financial statements of the Group have been prepared in accordance with generally
accepted accounting principles in Japan, and necessarily include amounts based on estimates,
judgements and assumptions by management regarding period-end balances of assets and liabilities,
as well as income and expenses for the reporting period. The Group has continuously estimated,judged and assumed based on a number of factors that are considered to be reasonable under the
past business results and surrounding conditions. Because of uncertainty unique to estimates, actual
results could differ from these estimates.
The significant accounting policies adopted for the consolidated financial statements of the Groupare described in V. Financial Information. We consider the following significant accounting policies
to have a material effect on our significant judgements and estimates.

22 Facilities and Equipment

Allowances for doubtful accounts
To provide for a possible bad-debt loss, the Group provides the expected uncollectible amount asallowances for doubtful accounts. The said amount is calculated by using credit-loss prediction
ratios based on historical data for general accounts receivable, and by reference to the individualcollectability for special receivables, such as those in danger of being uncollectible. If ourcustomers’ ability to pay falls due to financial deterioration in the future, larger allowance or baddebt loss will be recognized.
Impairment losses on investment securities
Investment securities with readily determinable market value are stated at market value, while
those without readily determinable market value are stated at cost. The Group recognizes
impairment losses on the investment securities based on reasonable criteria as those securities
with readily determinable market value are exposed to the risk of price fluctuation of the stock
market and those securities without readily determinable market value are exposed to thepossibility of deterioration of the business performance of companies in which the Group has
invested in.
The Group has appropriately posted impairment losses on investment securities. However,
because of the above criteria, posting of additional impairment losses would be necessary if fallin market or deterioration of the Group’s investment destination cause further losses or defaults
to occur in the future.
Deferred tax assets
Deferred tax assets are reported in the amount deemed collectible based on reasonable assessmentof future taxable income and consideration of the collectability. Changes in estimated collectible
amounts, however, could have an effect on earnings due to reversal of or additional provision todeferred tax assets.
B. Perception, analysis and discussions of the status of the operating results, etc. for the current fiscal
yeara) Financial condition(i) Assets
Current assets increased by ¥5,094 million year on year to ¥161,426 million. This was mainly due
to a ¥8,875 million increase in cash and deposits and a ¥2,500 million decrease in securities.
Fixed assets decreased by ¥2,929 million year on year to ¥259,946 million mainly due to a ¥6,425
million decrease in buildings and structures, a ¥2,581 million increase in machinery, equipment
and vehicles, a ¥6,652 million increase in construction in progress, a ¥2,545 million decrease ingoodwill, and a ¥4,822 million decrease in investment securities.
As a result of the above, total assets increased by ¥2,166 million year on year to ¥421,373 million.
(ii) Liabilities and net assets
Total liabilities decreased by ¥502 million year on year to ¥155,273 million. This was mainly
attributable to a ¥3,490 million decrease in notes and accounts payable –– trade and a ¥2,770
million increase in accrued income taxes.
The ending balance of interest-bearing debt increased by ¥1,294 million year on year to ¥61,414
million.
Net assets increased by ¥2,668 million year on year to ¥266,100 million mainly due to a ¥12,848
million increase in earned surplus and purchase of treasury stock of ¥9,256 million.
As a result, the equity ratio declined by 0.3 percentage points to 53.7%, and net assets per share
increased by ¥42.33 to ¥1,582.27.

Facilities and Equipment 23b) Sources of cash and liquidity(i) Cash flow analysis
Further details regarding cash flow analysis during the current fiscal year is given in “3.
Management Analysis of Financial Position, Operating Results and Cash Flows, (1) Overview ofoperating results, etc., B. Status of Cash flows.”
Movements in the principal cash flow-related indicators of the Company, on a consolidated
basis, are as follows.
Fiscal
year
2015
57.1

Fiscal
year
2016
55.1

Fiscal
year
2017
54.0

Fiscal
year
2018
53.7

Equity ratio(%)

Fiscal
year
2014
54.6

Equity ratio based on market value

(%)

82.6

120.1

104.8

101.2

93.6

Interest-bearing debt to cash flows ratio (year)

0.8

1.1

0.8

2.2

1.5

116.0

89.5

146.4

75.8

122.5

Interest coverage ratio(times)Figures presented for the fiscal year ended November 30, 2015, have been adjusted retrospectively toreflect changes in policies for recording net sales.
(Definition)
Equity ratio = Shareholders’ equity / Total assets
Equity ratio based on market value = Total market value of the stock / Total assets
Interest-bearing debt to cash flows ratio = Interest-bearing debt / Cash flows
Interest coverage ratio = Cash flows / Interest paid
(Notes)1. Each index is calculated based on consolidated financial figures.
2. Total market value of the stock is calculated by multiplying the final market price by the number ofissued shares at the end of fiscal year (excluding treasury stock).
3. Interest-bearing debt includes all consolidated balance sheet-reported liabilities on which interest ispaid.
4. Cash flows and Interest paid are the same figures as found under “Net cash provided by operating
activities” and “Interest paid” reported in the Consolidated Statements of Cash Flows, respectively.

(ii) Demand for funds
The Group strives to procure financing and ensure liquidity in order to meet demand for funds
particularly for capital investment, business investment, debt repayment and working capital,
with the aim of further increasing corporate value.
(iii) Procurement of funds
The Group appropriates necessary funds by means of internal financing, and otherwise arranges
financing through bank borrowings and corporate bond issuance when faced with a shortfall offunds.
(iv) Liquidity of funds
The Group arranges overdraft facilities with multiple financial institutions. In addition, theGroup centrally manages surplus funds of the Company and the Group’s consolidated
subsidiaries in Japan, and has accordingly adopted a cash management system with the aim ofenhancing funding efficiency and reducing financing costs.

24 Facilities and Equipment

4. Material Contracts
There are no material contracts to report for the reporting period.

5. Research and Development
The Group carries out extensive Research and Development (R&D) in all of our separate lines of business– “Condiments products,” “Egg products,” “Delicatessen products,” “Processed foods” and “Finechemical products,” setting a high value on good taste, kindness, and uniqueness to contribute to betterand healthier dietary lifestyles of people from around the world.
R&D is carried out through cooperation among the Company’s R&D Division and Production
Technology Department, and the R&D units of consolidated subsidiaries at home and abroad, including
Aohata Corporation, Kanae Foods Co., Ltd., Deria Foods Co., Ltd., Kewpie Jyozo Co., Ltd., Co-op Foods
Co., Ltd., and Salad Club, Inc., all of which are based in Japan, and overseas facilities including Q&B
FOODS, INC., HENNINGSEN FOODS, INC., Mosso Kewpie Poland Sp. z o.o., BEIJING KEWPIE CO.,LTD., Hangzhou Kewpie Corporation, KEWPIE (THAILAND) CO., LTD., KEWPIE MALAYSIA SDN.
BHD., KEWPIE VIETNAM CO., LTD., and PT. KEWPIE INDONESIA.
The Company’s R&D Division, in particular, aims to achieve dramatic growth by pursuing newchallenges for the Group. To such ends, it creates technologies and ingredients full of originality, andaccordingly carries out research and development geared to making enjoyable and healthy foodlifestyles possible for our customers worldwide.
In the area of external collaboration, the Group vigorously pursues open innovation with research
institutes both in Japan and overseas, and accelerated high-value R&D.
In addition, during the current fiscal year the Group made progress in creating new systems looking
toward the Ninth Medium-term Business Plan. In July 2018, we established the Institute of Food
Creation, the Institute of Technology Solutions, and the R&D Planning Department. The Institute ofFood Creation engages in research and development with the aim of contributing to food lifestyles andhealth of our customers worldwide. The Institute of Technology Solutions engages in research anddevelopment geared to creating value and finding solutions to challenges with respect to food andhealth of our customers worldwide. The R&D Planning Department aims to get the most out of the R&D
function by strengthening collaborations with development sites in Japan and overseas, and byaccordingly engaging in planning and promotion of R&D initiatives. These units coordinate efforts inorder to leverage Group-wide synergies in R&D and strengthen the Group’s ability to create added
value.
Working in tandem with these R&D activities, the production technology units utilize the abundant
and unique skills they have built up in production technology and development technology to develop
facilities and equipment that will create products developed by research units with an emphasis on
quality. They also make full use of their creative and unique on-site IT technologies to develop
production environments and standardized systems that will raise the level of production efficiency of
the Group and enhance its quality assurance systems.
Total research and development expenses for the Group for the current fiscal year amounted to¥4,142 million.
The following is a summary of the research and development activities by the reportable segments.
Condiments products, Egg products, Delicatessen products, Processed foods, and Fine chemical
products
During the current fiscal year, thirty-one presentations were made and eight essays were submitted
and published regarding research results created in our R&D activities. The table below lists themain presentations and essays coordinated both internally and with external entities.

Facilities and Equipment 25<Presentations>
Title
Effect of mayonnaise containing linseed oil
on suppressing elevation of bloodpressure
Analysis of the mechanism of fermentative
production of high concentration and highmolecular weight hyaluronic acid

Annual Meeting
15th Japanese Society for
Medical Use of Functional
Foods
The 2018 Annual Meeting ofJapan Society for Bioscience,
Biotechnology andAgrochemistry
Association for
Characterization of koku taste in egg yolk
Chemoreception Sciences
type mayonnaise and the influence on the(AChemS)cells expressing calcium-sensing receptor
The 72nd Annual Meeting
Dietary egg white peptide prevents
development of NAFLD induced by orotic of Japan Society of Nutrition
and Food Scienceacid in rats
Effect of dried egg white powder on the2018 IFT
rheological properties of gluten-free
Annual Meeting & Fooddough and texture properties of the bread
Expo
Evaluation of cabbage residue silage for a 124th Annual Meeting ofnovel feedstuff of dairy cows
Japanese Society of Animal
Science
Minimum effective dose of egg white
17th International Society of
peptides on anti-fatigue effects in middle- Behavioral Nutrition andaged marathon runners
Physical Activity
Formation of protein aggregates involved 65th Annual Meeting of The
Japanese Society for Foodin high-hardness heat-induced dried egg
Science and Technology
white gel
Effect of eggshells applied as fertilizer for 65th Annual Meeting of The
rice paddy field cultivation on the physio- Japanese Society for Foodchemical characteristics of cooked rice (1st Science and Technology
report)Storage of commercial-use cabbage in
The 2018 Annual Meeting ofplastic containers
The Japanese Society for
Horticultural Science
Evaluation of Self-Micro Emulsifying Drug The 33rd Annual Meeting ofDelivery Systems using egg yolk lecithin
The Academy ofPharmaceutical Science andTechnology, Japan
Study on anti-fatigue effect of egg white
The 65th Annual Meeting of
peptide per individual sporting events
the Japanese Society of
Nutrition and Dietetics
Properties of egg yolk treated withThe International Egg
protease and its application
Symposium

Collaborator
Kyushu University,
Prefectural University of
Kumamoto
Chitose Laboratory Corp.

Korea Food ResearchInstitute
Kyushu University

University of Nebraska

Tokyo University ofAgriculture andTechnology
Hokkaido University of
Education
Columbia Medical Office
Tokyo University ofAgriculture
Tokyo University ofAgriculture

Tokyo University ofAgriculture,
Azabu University

Nippon Sport Science
University
Kyoto Women’s University<Essays>
Title
Regular egg consumption at breakfast by
Japanese woman university students
improves daily nutrient intakes: openlabeled observations
Effect of pH on Foam Formation of Spraydried Egg White Dispersion by Whipping

Journal of Publication
Asia Pacific Journal of
Clinical Nutrition

Collaborator
Ochanomizu University
Toyo University

Food Science andTechnology
Research

University of Shizuoka

26 Facilities and Equipment

Title
Higher Vegetable Intake Improved Blood
Glucose Level in Vietnamese With Type 2
Diabetes Mellitus

Journal of Publication
International Journal of
ClinicalNutrition & Dietetics

Collaborator
Hanoi Medical University,
Jumonji University

Body odor aldehyde reduction by acetic
acid bacterial enzymes

International Journal of
Cosmetic Science

Enhancement of lymphatic transport oflutein by oral administration of a solid
dispersion and a self-microemulsifying
drug delivery system

European Journal of
Pharmaceutics andBiopharmaceutics

ENVIRONMENTALCONTROL CENTER CO.,LTD.
Hokkaido University<Condiments products>
For our dressings, we carried out a renewal of Kewpie dressings to mark the 60th anniversary of
their launch during the current fiscal year. With respect to the 180-ml-sized dressings, we introduced
newly developed containers that provide greater ease of use, and we improved the flavor of ourCaesar Salad Dressing and Grated Onion Dressing, our core products. In the area of container
development, we have been shifting from use of glass bottles to plastic bottles leveraging Kewpie’s
original technologies, which has resulted in containers that are light-weight, easy to open, easy toshake, easy to pour, easy to sort and environmentally sound. We have also succeeded in reducing
the weight of the containers by about 100 grams in comparison with conventional glass bottles, andhave reduced greenhouse gas (GHG) emissions by approximately 20% with respect to emissions
caused by raw material procurement, container production and container transportation. As a resultof those efforts, our dressing bottle received the Food Packaging Award in the Japan Packaging
Contest 2018 held under the sponsorship of the Japan Packaging Institute (JPI), and furthermore
received an award in the Consumer Package category of the Worldstar Competition.
We also proposed an expanded concept of salads involving a new notion of palatability with thelaunch of our new products Mango Dressing and Deep-roasted Sesame Dressing Spicy Taste dressing.
Moreover, we proposed new ways of enjoying salads through use of our Kewpie Salad Salt line ofpowdered condiments amid trends of mounting health consciousness and propensity for natural
foods, and an increasing number of people who prefer seasonings that bring out the taste of theingredients.
In food services, we proposed means of extending uses of dressings from salads to main disheswith our launch of our Kewpie Gudakusan Dressing line, which won The Japan Food Journal Co., Ltd.’s
Blockbuster Processed Food for Industrial Use Award.
In the mayonnaise category, we have been striving to enhance our core categories by promoting
the notions of taste and convenience and stimulating the market, as well as technology and productdevelopment that focuses on environmental concerns. As for new product containers, we worked
jointly with the Toyo Seikan Group in developing our Non-Stick Bottle whose inner-surface allows
contents to slide out easily thereby eliminating the amount of product that remains in the container
after use by approximately 60%. Kewpie Half (300 g) is being featured in the new bottle which went
on sale in limited quantities.
Our consolidated subsidiary Kewpie Jyozo Co., Ltd. has been developing products that draw
more value from Western-style vinegars, and has accordingly launched sales of two Vinegar Sauce
commercial-use products. Kewpie Jyozo has also launched sales of its seasoning with black vinegar andgarlic-flavored soy sauce commercial-use seasoning for delicatessen foods, along with its vegetable hotsauce and horseradish sauce seasonings that add a delicious accent to vegetable sushi.
<Egg products>
In the consumer markets, sales have been boosted as a result of having launched our Rare scrambled
egg product under the KEWPIE-NO-TAMAGO brand. The product, which draws on our original egg

Facilities and Equipment 27

processing technologies, tastes as if it had been made by a professional chef and is prepared simply
by placing the package in warm water and heating it in a microwave oven.
In the food services market, various customers have given us positive feedback upon having
launched sales of several Snowman brand products, including easy-to-use Scrambled Eggs (high grade)
geared to the restaurant and hotel industry which are subject to personnel shortages, Processed boiledegg (Soft boiled type) geared to the delicatessen and restaurant industry and available for use as atopping on various dishes to provide an unprecedented taste and food presentation, and Japanese
Omelet with Colorful Vegetables mainly targeting school meal programs given the attention it places
on ingredients.
Furthermore, we conducted product development using our Pure White® egg ingredient featuring
white-colored egg yolk, launching sales of Scrambled egg (white color) and Thin omelet (white color)under our Snowman brand as ready-to-eat products. These products have been well received by ourcustomers in the restaurant business, particularly for use in menu items featuring white-colored eggs
during Easer events.
As for egg ingredients, we launched our Forzen whole egg to realize soft texture upon having
enhanced our capabilities using new technologies. The product has contributed to an increase inproduct quantities by addressing demands mainly of convenience store delicatessen food and boxedlunch vendors.
We have been continuing our efforts from last year with respect to carrying out market
evaluations and developing individual applications in the market for our Excel Egg SP liquid whole
egg product, thereby enabling us to address demands of our customers who had been dissatisfied
with the pasteurized liquid eggs currently available.
Sales have been boosted as a result of launching Separate packed frozen egg (Yolk and white) (Colorrich type) as a product under the Twin Pack series which has been well received as a substitute forshell eggs used in delicatessen foods. It features an agreeable color once cooked and is suitable forsteam convection preparation.
<Delicatessen products>
In the Delicatessen products business, the Company’s R&D Division worked closely with partners
including consolidated subsidiaries Deria Foods Co., Ltd. and Salad Club, Inc. to polish ourprocessing technology to provide safe, delicious salad and delicatessen foods and to conduct
product development.
In delicatessen foods, we have expanded our offerings of products geared to new sales channels(home delivery and business offices), particularly meal kits. Sales have also been boosted by strong
performance of delicatessen foods that cater to health-conscious customers (items containing lactic
acid and GABA).
In order to make progress in proposing new ways of enjoying the delicious taste of vegetables,
we launched sales of three new Vegetable Soup products that draw out the taste of vegetables,
containing 70 grams of vegetables in a single pouch, and two new 100% Salad: Salad Shop’s Smoothie
products containing one meal’s worth of vegetables in a single bottle.
As for packaged salads (cut vegetables), we expanded our offerings of the Vegetables for half a dayseries which makes it possible to consume half of one’s daily vegetable intake (350 grams) as
recommended by Japan’s Ministry of Health, Labour and Welfare.
We also launched sales of Cabbage Rice made from cores of cabbage cut into rice-sized pieces, asa proposal for new ways of enjoying vegetables. Offering the sweetness of cabbage cores combinedwith a rice-like texture and flavor, this product has increasingly been attracting the attention of very
health-conscious customers who are concerned about their intake of calories and carbohydrates.
In the area of long shelf life (LL) salads for commercial-use, we launched sales of two products
under the Salad by Kewpie brand, Carrot Salad and Beets & Onion Salad. We launched sales of seven
items including our Taramasalata upon having revamped them so they align with customer
preferences.

28 Facilities and Equipment

Moreover, as an initiative geared to effective use of resources and environmental conservation,
we have succeeded in recycling vegetable scraps generated by the Group, for use as feed for dairy
cows. For those initiatives we were awarded the Prime Minister’s Prize which is the highest honorof the FY2018 3Rs (Reduce, Reuse, and Recycle) Awards.
<Processed foods>
Our development efforts in the Processed foods business involve close collaboration between the
product development units of our respective Group companies and the Company’s own R&D
Division. In so doing, we focus on short-, medium- and long-term research and development themes,
leveraging the strengths of each of those entities.
The Company’s R&D Division plays a central role in developing nursing care foods, baby foods,
healthcare products and other products requiring special preparation technologies, as well as
National Brand (NB) Products. The division also plays a central role in other areas such as engaging
in medium- to long-term product development initiatives with respect to developing newtechnologies and raw materials, and creating new product categories that will assume a leading rolein the next generation.
In our Aeru Pasta Sause series we revamped our Meat Sauce with Fond de Veau, Cod roe and Mentaiko(Spicy cod roe) sauces by introducing new ingredients and original manufacturing methods that
result in delicious pasta simply by dressing boiled pasta in one of the sauces. The Cod roe sauce inparticular has helped us to boost sales as a result of having linked promotions with the sauce, which
now tastes even better than before given that it contains the perfect blend of savory cod roe and therichness of butter.
We also launched sales of our Salad Club Hokkaido Corn Cream Style which provides the appeal of
convenient retort pouch packaging with a delicious taste that brings the flavor of Japanese corn tolife.
With respect to our Yasashii Kondate series of nursing care foods under the category of Universal
Design Foods (UDF), we developed four products with the aim of enhancing our lineup of foods
under the category of foods that “can be broken down by tongue pressure.” These products consistof four items which include Soft Beef Bowl-style Ojiya Rice Porridge, two side-dish menu items, andone dessert item.
In our From Around 7 Months Old series of baby foods in jar, we launched sales of our new Cream
Sauce with White Fish & Vegetables product as we make progress in enhancing existing productcategories in part by overhauling packaging.
<Fine chemical products>
In the Fine chemicals business, we are moving forward with research and product development tomaximize the possibilities of hyaluronic acid, egg components and our original performance
ingredients.
During the current fiscal year, we developed our ksmart submucosal injectant for endoscopes,
which is Kewpie’s first medical device that uses hyaluronic acid. Having been granted approval for
manufacture and sales of the product, we have begun selling it to medical institutions throughOlympus Corporation. We have also embarked on development with respect to a second medical
device.
In raw material sales, we have been tapping overseas markets for hyaluronic acid for medical use.
To that end, we have been developing products that align with standards demanded by ourcustomers, and have been proactively working to expand business by offering sample products.
As for egg components, we changed the container for K Blanche, an alcohol preparation that
contains heat-denatured lysozyme derived from egg whites which effectively deactivates the
norovirus, thereby making it even easier to use.
Also with respect to a powder-type heat-denatured lysozyme preparation, we embarked on joint
development efforts with the aim of adopting it to products of other companies in order to expand
its range of applications beyond alcohol preparation.

Facilities and Equipment 29

We began making improvements to production methods with the aim of making our YOITOKI
food product which mitigates the negative effects of alcohol consumption even easier to consume.
The product is the first of its kind in the world to use acetic acid bacteria enzyme, and was developed
as a result of having focused our attention on the alcohol degrading enzyme found in acetic acidbacteria which produces the vinegar that is used as a raw material in mayonnaise. We have also
embarked on basic research with the aim of finding potential new health functions of acetic acidbacteria.
In overseas product development efforts, our American subsidiary Q&B FOODS, INC. launchedsales of Kewpie brand YUZU & KOSHO Dressing. That product received the Specialty Food
Association’s Gold Award in the Salad Dressing category, and it was also showcased at the SIAL
international food exhibition held in Paris.
In the Western European market, a partner company developed and launched sales of three
Kewpie brand gluten-free dressing items.
In the Eastern European market, Mosso Kewpie Poland Sp. z o.o. developed and launched salesof three dressing items, including Mosso brand sesame dressing.
In the Southeast Asian market, the R&D unit of KEWPIE (THAILAND) CO., LTD. developed andlaunched sales of three Thai-style dressing items incorporating distinctive fresh herbs grown locally.
Given that these products have been well received as dressings that offer unprecedented new flavors,
we plan to launch sales in the Southeast Asian market beyond Thailand going forward.
The R&D unit of PT. KEWPIE INDONESIA also developed and launched sales of Kewpie Chefstyle Mayonnaise geared to food service businesses. This product features unique attributes because
it is readily mixed with sambal and other local seasonings using original technologies for controllingmaterial properties.
In the Chinese market, having developed microbial control technologies for sauces that make itpossible to ship them at room temperature, the local R&D unit has developed and launched sales of
new types of sauces that are used in conjunction with noodles and other such ingredients.
Common business operations and Distribution system
There is nothing to be reported regarding the R&D of these segments for the reporting period.

30 Facilities and Equipment

III. Facilities and Equipment
1. Investments in Facilities and Equipment
As a result of continuous investments to augment, upgrade and streamline facilities, the Group invested
a total of ¥32,105 million in facilities and equipment during the current fiscal year. These investments
were part of the Company’s efforts to preserve the environment and were made for the purpose of
improving product safety, reducing production costs, and developing products that meet customers’
needs.
Investments in facilities and equipment by segments were as follows:

Segment

Amount of capital
investment(millions of yen)

Condiments products

5,565

Egg products

11,719

Delicatessen products

3,634

Processed foods

2,310

Fine chemical products
Distribution system
Common business
operations(Notes)

233
7,842
799

Main contents
Augmenting and streamlining facilities for production of mayonnaise,dressings
Augmenting and streamlining facilities for production of liquid egg,
egg spread, thick omelet
Augmenting and streamlining facilities for production of salads,
delicatessen foods
Augmenting and streamlining facilities for production of jams, pastasaucesAugmenting and streamlining facilities for production of hyaluronic
acid
Warehouse facilities, vehicles
Software

1. The amounts of capital investment include investment in intangible fixed assets and long-term prepaid expenses.
2. Consumption taxes are not included in the above amounts.

There were no sales or removals of facilities and equipment that have a significant impact on production
capacity.

Facilities and Equipment 31

2. Principal Facilities and Equipment
Investments in facilities and equipment, and the number of employees working at each site as ofNovember 30, 2018 are as follows:
The Company

Site

Hashikami Factory(Hashikami-cho,
Sannohe-gun,
Aomori)

Segment

Facilities
andequipment

Book value (millions of yen)
Buildings
andstructures

Machinery,equipment
and vehicles

Land
(m²)

Lease
assets

Other

Total

—

21

1,584

31

97

13,835

1

99

6,914

—

17

2,279

0

34

3,144

—

12

4,380

131

278

15,772

—

21

2,042

—

14

3,670

138

280

1,146

1

436

7,397

—

25

99

—

14

10,976

Number of
employees

Condiments
products
Egg products
Delicatessen
products

For foods

530

479

For foods

6,656

3,314

For foods

4,725

1,682

For foods

1,341

648

For foods

1,115

1,978

553
(46,365)1(—)

Processed foods
Goka Factory(Goka-machi,
Sashima-gun,Ibaraki)

Condiments
products
Processed foods
Fine chemical
products

Condiments
Nakagawara Factory products(Fuchu-shi, Tokyo)
Processed foods
Fujiyoshida Factory(Fujiyoshida-shi,
Yamanashi)
Koromo Factory(Toyota-shi, Aichi)

Condiments
products
Processed foods
Condiments
products
Egg products

Itami Factory(Itami-shi, Hyogo)

Egg products

For foods

1,469

560

Kobe Factory(Higashinada-ku,
Kobe-shi, Hyogo)

Condiments
products

For foods

7,330

6,430

For foods

752

604

For foods

2,556

736

Izumisano Factory(Izumisano-shi,
Osaka)
Tosu Factory(Tosu-shi, Saga)
Head Office

Condiments
products
Processed foods
Condiments
products
Processed foods—

For others

Complex of facilities(Chofu-shi, Tokyo)—

For others

Tokyo Branch andother 8 branches and17 sales offices—

For others(Shibuya-ku, Tokyo)

Kobe Distribution
Center(Higashinada-ku,
Kobe-shi, Hyogo)

For warehousing
Distribution system and distribution
system726[5,560]6,664

73[16,866]

4,284

0

157

0

601

3,734
(221,051)

405(43,484)272(59,399)

16(37,876)
2,337(37,919)
1,601(16,776)663(18,576)363(53,958)—(—)
138(16,510)
—
(—)

6,075
(47,252)

295
(128)

139
(90)

1
(—)

144
(131)
41
(127)
109
(21)
68
(66)

1
(—)
746
(145)
274
(9)
689
(57)

—
(—)

32 Facilities and Equipment

Domestic subsidiaries

Trade name

Site

Segment

Facilities and Buildings
andequipment

Book value (millions of yen)

Machinery,equipment
structures and vehicles

Head Office, Factory and
Kewpie Egg
Office, etc.
Egg products
Corporation(Chofu-shi, Tokyo, etc.)

For foods

3,144

4,215

Head Office and Branch,
Delicatessen
Deria Foods
etc.
products
Co., Ltd.
(Chofu-shi, Tokyo, etc.)

For foods

2,315

62

For foods

1,275

1,222

For
warehousing
anddistribution
system

8,994

3,211

2,003

1,607

KewpieJyozoCo., Ltd.

Head Office and Factory Condiments(Chofu-shi, Tokyo, etc.) products

Head Office and BranchDistribution
K.R.S.
Office, etc.
systemCorporation(Chofu-shi, Tokyo, etc.)

Co-op Foods Head Office and Factory
Processed foods For foodsCo., Ltd. (Chofu-shi, Tokyo, etc.)
Kanae Foods Head Office and Factory
Egg products
Co., Ltd. (Chofu-shi, Tokyo, etc.)

For foods

1,692

3,974

Zen-nohHead Office and Factory
Kewpie Egg(Goka-machi, Sashima- Egg products
station Co.,gun, Ibaraki, etc.)
Ltd.

For foods

858

765

Head Office and Factory Delicatessen(Soka-shi, Saitama)
products

For foods

732

68

Dispen Pak Head Office and Factory
Condiments
Japan(Minami-Ashigara-shi,
products
Co., Inc.
Kanagawa, etc.)

For foods

260

646

Head Office and Factory,
PotatoDelicatessen
etc.
Delica Co.,
(Azumino-shi, Nagano, products
Ltd.
etc.)

For foods

1,064

543

Condiments
products

For foods

233

754

Distribution
systemFor
warehousing
anddistribution
system863

2,814

Seto Delica Head Office and Factory DelicatessenCo., Ltd. (Seto-shi, Aichi)
products

For foods

207

146

Head Office, Factory,
Salad Club,and Branch, etc.
Inc.
(Chofu-shi, Tokyo, etc.)

Delicatessen
products

For foods

634

1,133

K.Tis
Head Office and Office
Corporation (Chofu-shi, Tokyo, etc.)

Distribution
systemFor
warehousing
anddistribution
system447

2,155

Head Office and Office
Shunsai Deli
(Akishima-shi, Tokyo,Co., Ltd.
etc.)

Delicatessen
products

For foods

588

738

Soka
DelicaCo., Ltd.

Land
(m²)

3,793
(89,020)217(13,790)
2,163(69,749)

14,251(248,206)

281(72,409)
2,162(45,997)405(10,287)

1,264(7,858)836(7,697)518(32,635)

Lease
Other
assets

Total

102

146

11,401

6

17

2,618

12

90

4,765

897

761

28,115

18

34

3,944

—

95

7,924

—

12

2,042

130

6

2,201

—

11

1,755

294

10

2,430

7

11

1,006

—

36

6,098

858

12

1,225

12

17

1,914

105

9

5,595

25

52

1,605

Number of
employees
985
(166)
184
(62)
219
(119)

662
(279)

183
(212)
386
(652)
157
(144)

61
(148)
102
(78)

95
(175)

Head Office, Factory andKpack Co., Office, etc.
(Goka-machi, SashimaLtd.

—
(—)

111
(140)

gun, Ibaraki, etc.)
Head Office and Office,S.Y.
Promotion etc.
Co., Ltd. (Koto-ku, Tokyo, etc.)

2,384(115,791)

—
(—)
117
(9,782)

2,877(57,117)200(4,761)

477
(108)

56
(245)
307
(767)

1,279
(229)

213
(586)

Facilities and Equipment 33

Trade name

Site

Segment

Head Office and Office,
Sun Family etc.
Distribution
Corporation (Yoshikawa-shi, Saitama, system
etc.)

Facilities and Buildings
andequipment

Book value (millions of yen)

Machinery,equipment
structures and vehicles

For
warehousing
anddistribution
system539

252

For foods

1,013

414

Head Office, Factory and
Office, etc.
AohataProcessed foods For foods
Corporation (Takehara-shi,
Hiroshima, etc.)

1,768

2,088

Buildings
andstructures

Machinery,equipment
and vehicles

Green
MessageCo., Ltd.

Head Office and Factory Delicatessen(Yamato-shi, Kanagawa) products

Land
(m²)

517
(10,889)

—
(—)

1,343
(67,378)

Lease
Other
assets

Total

468

44

1,823

—

13

1,441

—

136

5,337

Number of
employees

1,212(1,570)

31
(162)

456
(204)

Foreign subsidiaries

Trade nameFacilities andequipment

Book value (millions of yen)

Site

Segment

HENNINGSEN FOODS, Nebraska, USA
INC.

Egg products

For foods

503

1,075

HangzhouCondiments
KewpieZhejiang Province, China
products
Corporation

For foods

623

1,316

BEIJINGKEWPIE
CO., LTD.

Condiments
products

For foods

912

985

KEWPIE(THAILAND) Bangkok, Thailand
CO., LTD.

Condiments
products

For foods

458

615

Nantong
KewpieJiangsu Province, China
Corporation

Condiments
products

For foods

1,482

728

Mosso
KewpiePuchały, Poland
Poland Sp. z
o.o.

Condiments
products

For foods

799

209

Beijing, China

Land
(m²)

20
(56,170)
—
(—)
—
(—)
146
(104,797)
—
(—)

256
(11,599)

Number of

Lease
Other Total employees
assets

173

167

1,940

—

66

2,006

—

29

1,926

39

511

1,770

—

67

2,278

83

23

1,371

164
(—)
566
(—)
641
(—)
1,042
(8)
93
(—)

164
(—)

(Notes regarding above-mentioned (1) The Company, (2) Domestic subsidiaries and (3) Foreign subsidiaries)
1. “Other” listed under Book value includes tools, furniture and fixtures (construction in progress is excluded), and the amounts exclude
consumption taxes.
2. The figures in brackets under Buildings and structures indicate the total area (m2) of leased properties.
3. Under Number of employees, the figures in parentheses indicate the number of temporary employees.

34 The Company

IV. The Company
1. Shares
Number of authorized and issued sharesa) Authorized shares
Class
Common stock

Number of authorized shares
500,000,000

Total

500,000,000b) Issued shares
Number of issued shares
Class

Stock exchange

Remarks

150,000,000

Tokyo Stock Exchange(First Section)

 Ordinary shares of the Company withno restrictions on shareholders’ rights
 Number of unit share: 100 shares

150,000,000——

End of period(Nov. 30, 2018)

Filing date(Feb. 28, 2019)

Commonstock

150,000,000

Total

150,000,000

Stock acquisition rightsa) Stock options
Not applicable.
b) Rights plan
Not applicable.
c) Other information about stock acquisition rights
Not applicable.
Exercise of bonds with stock acquisition rights containing a clause for exercise price revision
Not applicable.

The Company 35

Principal shareholders

Trade name

Address

NAKASHIMATO CO., LTD.
4-13, Shibuya 1-chome, Shibuya-ku, Tokyo
TOHKA CO., LTD.
4-13, Shibuya 1-chome, Shibuya-ku, TokyoJapan Trustee Service Bank, Ltd.
8-11, Harumi 1-chome, Chuo-ku, Tokyo(Trust account)
The Master Trust Bank of Japan, Ltd.
11-3, Hamamatsu-cho 2-chome, Minato-ku,
Tokyo(Trust account)
Kieikai Research Foundation
4-13, Shibuya 1-chome, Shibuya-ku, Tokyo
Trust & Custody Services Bank, Ltd.:
trustee of sub-trust of Mizuho Trust
8-12, Harumi 1-chome, Chuo-ku, Tokyo& Banking Co., Ltd.
Employee Retirement Benefit Trust
Account for Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation 1-2, Marunouchi 1-chome, Chiyoda-ku, Tokyo
6-6, Marunouchi 1-chome, Chiyoda-ku, Tokyo
Nippon Life Insurance Company(standing proxy: The Master Trust(11-3, Hamamatsu-cho 2-chome, Minato-ku,
Bank of Japan, Ltd.)Tokyo)The Dai-ichi Life Insurance Company,
13-1, Yurakucho 1-chome, Chiyoda-ku, Tokyo
Limited (standing proxy: Trust &(8-12, Harumi 1-chome, Chuo-ku, Tokyo)
Custody Services Bank, Ltd.)
Nakato Scholarship Foundation
4-13, Shibuya 1-chome, Shibuya-ku, Tokyo
Total—(Notes)1.
2.
3.

(As of November 30, 2018)
Ratio of (A) to thetotal number of
Number of theCompany’s sharesissued shares
held (A) (thousand)(excluding
treasury stock) (%)
15,071
10.54
8,122
5.68
7,212

5.04

5,571

3.89

4,251

2.97

3,713

2.60

3,208

2.24

3,039

2.12

3,012

2.11

2,494
55,697

1.74
38.94

The 3,713 thousand shares held by Mizuho Trust & Banking Co., Ltd. Retirement Benefit Trust (for Mizuho Bank, Ltd.) are the trust assets
entrusted by Mizuho Bank for its retirement benefit trust.
The Company holds 6,956,925 shares of treasury stock.
The ratio of number of the Company’s shares held is calculated excluding the treasury stock.

36 The Company

2. Acquisition of the Company’s Treasury Stock[Types of shares repurchased]
Shares of common stock repurchased as defined by Article 155, Items 7 and Article 163 of the Companies
Act(1) Purchase of treasury stock based on a resolution by the General Meeting of Shareholders
Not applicable.
(2) Purchase of treasury stock based on a resolution by the Board of Directors
Shares of common stock repurchased in accordance with the provisions of Article 163 of theCompanies Act
Item
Repurchase approved at the Board of Directors’ meeting held on October 2, 2018
(Repurchase period: From October 3, 2018 to November 30, 2018)

Number of shares

Total price (yen)4,400,100

10,177,431,300

Treasury stock held prior to the current fiscal year——

Shares repurchased during the current fiscal year

4,000,000

9,252,000,000

Total remaining number and value of shares resolved to be repurchased

400,100

925,431,300

Percentage of unexercised portion as of final day of the current fiscal year (%)

9.1

9.1

Shares repurchased during the specified period——

Percentage of unexercised portion as of the document filing date (%)

9.1

9.1

(Notes) The repurchased shares of treasury stock presented above are acquired by means of tender offer, pursuant to the resolution of the meeting of theBoard of Directors held on October 2, 2018.
1. Board of Directors' resolution regarding the treasury stock acquisition
Type of shares to be purchased:
Common stock
Total number of shares to be purchased:
4,400,100 shares (maximum)
Total acquisition price:¥10,177,431,300 (maximum)
Acquisition period:
From October 3, 2018 to November 30, 2018
2. Summary of the purchases, etc.
Period of the purchases, etc.:
From October 3, 2018 to October 31, 2018
Date of public notice of the commencement of the tender offer: October 3, 2018
Price of the purchases, etc.:¥2,313 per common stock
Commencement date of settlement:
November 22, 2018
3. Result of the purchases
Total number of shares acquired:
4,000,000 shares
Aggregate acquisition prices:¥9,252,000,000(3) Purchase of treasury stock not based on a resolution by the General Meeting of Shareholders or the
Board of Directors
Shares of common stock repurchased in accordance with the provisions of Article 155, Item 7 of theCompanies Act
Number of shares

Total price (yen)Shares repurchased during the current fiscal year

Item

1,404

3,952,144

Shares repurchased during the specified period

105

272,130(Note)“Shares repurchased during the specified period” does not include shares resulting from the purchase of treasury stock less than one unit
between February 1, 2019 and the document filing date of the Annual Securities Report.

(4) Disposal of repurchased shares and balance of treasury stock
Current fiscal year
Item

Specified period

Total disposal value
Total disposal value
Number of shares
Number of shares
(yen)
(yen)

Number of shares repurchased via solicitation

—

—

—

—

Number of repurchased shares retired

—

—

—

—

Repurchased shares transferred via a merger,
share exchange or division of the company

—

—

—

—

Other

—

—

—

—

6,956,925—

6,957,030—

Balance of treasury stock held
(Note)“Balance of treasury stock held” in “Specified period” does not include shares resulting from the purchase of treasury stock less than one unit
between February 1, 2019 and the document filing date of the Annual Securities Report.

The Company 37

3. Dividend Policy
The Company maintains a basic policy of providing returns to its shareholders with top priority on
dividend payments, and accordingly aims to continue providing stable dividends while also reviewing
options for repurchasing and retiring treasury stock as necessary, giving consideration to factors suchas stock price trends and financial conditions.
As for internal reserves, the Company endeavors to adequately secure them to strengthen its
financial position and provide an adequate supply of funds for future expansion. The Company willtake a medium to long-term view and continue to allocate funds to the improvement of its facilities andequipment, research and development, and the further streamlining of operations in order to enhance
its competitiveness.
With respect to determining the amounts to be paid in dividends, the Company will maintain aconsolidated dividend payout ratio of at least 30% in principle, and target a ratio of consolidated DOE
ratio of at least 2.2%.
As for dividends, the Articles of Incorporation of the Company stipulate that dividends from surplus
can be paid twice a year, comprising of interim and year-end dividends based on the resolution by the
Board of Directors, in accordance with the provisions of Article 459, Paragraph 1 and Article 454,
Paragraph 5 of the Companies Act.
For the current fiscal year, the Company intends to pay a year-end dividend of ¥19 per share. The
annual dividends will be ¥38 per share, which includes the interim dividend of ¥19 paid in August, for
an increase of ¥1.50 per share in comparison with the previous fiscal year.
As a result, the Company’s consolidated dividend payout ratio and consolidated DOE came to 30.4%
and 2.4% respectively for the current fiscal year.
The Company is a company subject to consolidated dividend regulations, meaning that it calculates
the distributable amount for dividends on a consolidated basis.

4. Corporate GovernanceCorporate governance(a) Corporate governance structure
Basic policy
To maximize the Company’s corporate value through efficient management, the Company has
recognized the following as priority tasks: the reorganization of the management structure andsystem of the Company and the entire group; the appropriate execution of required measures;and sharing the benefits created by the successful conduct of its business with its customers,
employees, business partners, shareholders, investors, and other stakeholders. These various
measures, taken together, constitute good corporate governance, in the view of the managementof the Group.
The Company fully recognizes that compliance is indispensable to its lasting development,
and promotes the formulation of a compliance program and its implementation in order to enable
all directors and employees of the Company to conduct business not only in full compliance withlaws and regulations, but also with the highest ethical view.

38 The Company

Overview of corporate governance structure
The Company utilizes the conventional management organization system, under which thedecision making of the Board of Directors is monitored by corporate auditors.
The Board of Directors of the Company, as its highest-level decision-making body, meets atleast once every month. In addition, a Management Council, a body supporting the Board of
Directors and Representative Director, President and Chief Executive Corporate Officer of theCompany, has been set up for deliberation on important management issues in accordance with
the Company’s basic management policies. To enable a speedy and effective response to changes
in the business environment, the scope of matters requiring discussion by the Board of Directors,
and the limits of decision-making authority delegated to Company officers depending on position
are subject to constant review with the goal of ensuring swift decision making and execution oforders at the operational level.
The managements of the core subsidiaries of the Group regularly participate in meetings ofthe Management Council. Participants in these meetings work to further advance Groupmanagement by such means as holding debates on Group policies.
In August 2018, the Company established its Nomination and Remuneration Committee as anadvisory body to the Board of Directors with the aim of enhancing objectivity, adequacy andtransparency regarding factors such as the composition of the Board of Directors and means of
nominating and compensating directors and others. It is to consist of no fewer than five members,
and at least half of its membership is to comprise outside directors and outside corporate auditors(the “outside officers”)who meet the independence criteria.
There is also a Management Advisory Board composed of experts from outside the Company.
This was set up with the goal of obtaining advice and recommendations so that the Group may
boost the soundness, fairness and transparency of its management and thus better serve society
and its customers.
Furthermore, we have reviewed the corporate officer system and have accordingly assigned
to Corporate Officers positions that had previously been assigned to Directors, with the aim ofpromoting delegation of authority to Corporate Officers, clarifying roles and responsibilities, andexpediting management.
At present, in the opinion of the management of the Company, no particular organizational
problem exists with regard to management decision making, execution, or supervision, but the
management will continue to examine and debate this matter at regular intervals so as to ensurethat appropriate corporate governance is always conducted.

The Company 39

The Corporate Governance System of the Group
General Meeting of Shareholders
Management andMonitoring

Nomination
andRemuneration
Committee

ReportConsult

Election

Directors
Board of Directors

Response
ReportReportCorporate Auditors
Audit & Supervisory Board

Account
Audit

Cooperation

Audit

ExecutionofBusiness

Internal
Controland RiskManagement

Management
Advisory
Board

Advice /Proposal

Legal
Counsel,Certified Tax
Accountants
and Other
Professionals

Advice /guidance

Election

ElectionIndependent
Auditors

ReportAudit

Appointment / supervision

ReportRepresentative Director, President andChief Executive Corporate Officer
Consult
Instructionordersupervision

ReportCooperation

Response

Cooperation

Management Committee
Referral/report

Executive Directors, Corporate Officers,
Business Divisions, Subsidiaries

Risk Management
Committee

Compliance
Committee

Audit

Information
Promotion
Committee

Internal Auditing
Department

Helpline: Internal control system

Reason for adopting the Group’s corporate governance structure
The Company places the establishment of the corporate governance structure etc. and theappropriate execution of required measures as one of the most important tasks of management.
The Company receives opinion and guidance from the two outside directors and the twooutside corporate auditors concerning the overall management of the Company. They also serve
the important role of monitoring the Representative Director, President and Chief Executive
Corporate Officer and the executive directors, and the Company believes in ensuring that themonitoring and advising function provided to the management is sufficiently working, and that
it is objective and neutral.
In addition, the Company sets the term of Directors at one year in order to clarify management
responsibilities each fiscal year and establish a management structure that can respond swiftly tochanges in the business environment.
Progress made in establishing internal control system
The Company, through the Board of Directors, has passed the following resolutions concerning
basic policy for building an internal control system.
A. Outline
The resolutions concerning the basic policy of building the Company’s internal control systemwere passed at the Board of Directors’ meeting in accordance with Article 362, Paragraph 5 of
the Companies Act. The aforesaid resolutions provide the broad framework for articles andparagraphs required for the system establishment of an internal control system as provided by
Article 100 of the Regulation for Enforcement of the Companies Act.
While the Company’s objective for the internal control system based on the aforesaid
resolutions is rapid implementation, the Company aims to review the system on a regular basis,

40 The Company

or when otherwise required, for the purpose of improvement, and through such, aims to create
an efficient and proper system for corporate operations.
B. System to ensure storage and management of information relating to the execution of duties
of directorsa) The director in charge of the Management Promotion Division shall implement operations forthe proper preservation and management (including disposal) of documents and otherinformation relating to the execution of duties of directors by using documents or electronic
information created in accordance with document management rules, the regulations on theuse of Company information, basic principles on the protection of personal information andmanuals related to the storage and management of such information, and when required, theaforesaid director shall inspect the state of such operation and review the respective rules.
b) At all times, the directors and corporate auditors shall be able to view these documents orelectronic information.
C. System for rules relating to management of risks of loss and other rulesa) The Company shall follow its risk management basic policy with respect to each individual
risk, and continuously monitor the organization etc. associated with the risk. In addition, theCompany shall share information related to all company risks at the Risk Management
Committee. The Risk Management Committee shall evaluate, and manage the overall orderof priority of the risks.
b) The Internal Audit Office shall audit the day-to-day risk management situation of therespective division or department of the Company or its subsidiaries in cooperation with thedivision or department’s staff member charged with the auditing of matters relating to
product quality, environmental protection and safety, and, when reporting on a regularbasis to the Risk Management Committee, Board of Directors and Audit & Supervisory
Board, shall not only report on matters related to risk management, but also report on the
progress of the establishment of the risk management system inside the Company.
c) The Company shall create a crisis management manual based on its risk management basic
policy. It shall first identify and categorize concrete risks and then establish informationtransmission and emergency response systems that provide a quick and proper response intimes of emergency.
D. System to ensure directors can efficiently execute their dutiesa) While providing group-wide management targets to be shared by directors and employees
and working to ensure group-wide permeation of such, the Company, aiming to achieve thesemanagement targets, shall strive to achieve an optimized organization through restructuring
and the Representative Director, President and Chief Executive Corporate Officer shallappoint person in charge of such duties for each business unit by the resolution of the Boardof Directors. By delegating authority to the aforesaid persons in charge of such duties, it shallbe possible to efficiently and quickly execute duties.
b) With regard to execution of duties based on the resolution of the Board of Directors, therespective scope of responsibility and decision-related procedures shall be provided in a form
stating decision-reporting procedures.
c) Measures deciding the forward course of management activities shall, in accordance withthe basic policy on execution of duties that was resolved by the Board of Directors, be
entrusted to scheduled or unscheduled discussions held in the Management Council thatserves as an advisory body directed by the Representative Director, President and Chief
Executive Corporate Officer, which shall make decisions and realize flexible execution ofduties.
E. System necessary to ensure the execution of duties by Company personnel complies with laws

The Company 41

and regulations and the Articles of Incorporation of the Companya) The Company shall establish provisions relating to the compliance system and provide theGroup Guidelines to ensure directors and employees act in a way that complies with laws
and regulations, the Articles of Incorporation of the Company and the motto and precepts of
the Company. Moreover, to ensure the thoroughness of such compliance, the Company shallappoint a director in charge of compliance to supervise the Compliance Committee. Throughdoing this, the Company led by the Compliance Committee, while striving to establish acompliance system that extends laterally across the Company and keep abreast of problematic
issues, shall create compliance manuals and train employees. The director in charge ofcompliance shall regularly report these activities to the Board of Directors and Audit &Supervisory Board.
b) Under the Compliance Committee, and serving as an internal reporting system for theprotection scheme of people reporting information in the public interest, a “helpline” shallbe established where outside lawyers, third-party bodies or corporate auditors, etc. are theinformation recipients. Upon receiving a report or notice from an information recipient, theCompliance Committee shall investigate the substance of the report or notice and if aviolation is apparent, it shall hold discussion with the unit responsible for the violation anddecide upon measures that will prevent the reoccurrence of such a violation. In addition toreleasing an internal company report that includes the result of disciplinary action, it shallcarry out measures that will prevent the reoccurrence of such a violation within the
Company.
F. System necessary to ensure the properness of operations in the corporate group that is formedby the Company, its parent company and its subsidiariesa) Subsidiaries of the Company shall report to directors of the Company, on a monthly basis, on
the risks involving business results and management. Moreover, directors of the Company
who have been dispatched as directors of a subsidiary and are present at the subsidiary’s
Board of the Directors’ meeting shall report to the director designated by the Representative
Director, President and Chief Executive Corporate Officer of the Company regarding thestatus of discussions by the subsidiary’s Board of Directors and management issues.
b) The committee members of Risk Management Committee of the Company shall include
person in charge of subsidiary oversight and this committee shall also manage the risks of its
subsidiaries. Moreover, subsidiaries shall also be included in the scope of activities of theCompliance Committee and the internal auditing unit, and have access to the helpline as well.
c) Consolidated management targets and policy on business operations of the corporate groupshall be shared at the Group Joint Management Council and in meetings of different
business areas. Moreover, the entire Group shall work toward optimization with respect tothe organization and human resources, and financing. Also, with regard to execution ofduties, the Company shall define areas of authority for managing subsidiaries based on the“group-wide form stating decision-making and reporting procedures,” and shall also
streamline delegation of authority while achieving balance with Group management.
d) To ensure proper operations of subsidiaries, the Company shall share its motto and precepts,
along with the Group’s goal of “unceasingly contributing to better and healthier dietary
lifestyles of people from around the world premised on the notions of good taste, kindness
and uniqueness” which make up the Group’s philosophy. Furthermore, all Directors andemployees shall adhere to the Group Policies which encompass the Code of Ethics and Codeof Conduct.
e) A Management Advisory Board has been set up as an advisory body to the Representative
Director, President and Chief Executive Corporate Officer of the Company, who receives theboard’s advice and recommendations for maintaining and improving the Group’s
soundness, fairness and transparency, and reflects these in decision making.

42 The Companyf) The Group shall, as a member of society, never become involved with anti-social forces thatare a menace to social order and security, and shall resolutely refuse improper solicitation.
g) To construct a system necessary to ensure the properness of financial reporting, the Groupshall establish various provisions related to financial reporting and aim to enhance internal
controls related to financial reporting by conducting educational programs and promoting
awareness of compliance of accounting standards and other related laws and regulations.
Moreover, the Company’s unit in charge of finance reporting, in cooperation with corporate
auditors of subsidiaries, shall construct a scheme for regularly evaluating and improving thestate of the design and operation of this system.
h) For K.R.S. Corporation and Aohata Corporation, which are subsidiaries of the Company,
systems necessary to ensure properness of operations shall be independently constructed ateach company as they are listed on the Tokyo Stock Exchange and have independent
corporate groups. However, the said companies will still share with the rest of the Groupthe consolidated management targets and there shall be a close exchange of information
relating to risk management and compliance.
G. Placement of employees to assist in corporate auditor duties
The Internal Audit Office executes internal auditing of matters requested by the corporate
auditors through deliberation with the Audit & Supervisory Board and reports the results ofsuch audits to the Audit & Supervisory Board. Moreover, if the Audit & Supervisory Board
requests to appoint an employee to assist in such duties, the Internal Audit Office shall
expeditiously comply with such a request.
H. Independence from the directors of employees who assist in corporate auditor duties andensuring effectiveness of corporate auditor instructions conveyed to such employeesa) Employees belonging to the Internal Audit Office who receive a request from the corporate
auditors to carry out necessary internal auditing duties shall not receive instructions or ordersthat relate to such internal auditing from directors etc. except the director in charge of theInternal Audit Office. Moreover, in order to ensure independence, when the Audit &Supervisory Board requests the placement of an employee to assist in auditing duties, that
employee shall not receive instructions or orders from directors.
b) Committees contributing to the internal control system such as the Risk Management
Committee and the Compliance Committee, the Internal Audit Office, and staff members ineach division or department in charge of auditing duties shall respect the opinions of eachcorporate auditor as they pertain to ensuring that the audit by the corporate auditors is
effective.
I. System for reporting to the corporate auditors including system for directors and employees,
and officers and employees of subsidiaries to report to the corporate auditorsa) Directors and employees, and officers and employees of subsidiaries shall report the
information necessary to respond to respective corporate auditor requests in accordance withthe stipulation of the Audit & Supervisory Board.
b) The subjects of the information matters mentioned in the previous paragraph are mainly: Content of agenda items for resolution at the General Meeting of Shareholders
 Status of activities at units concerning the construction of the Company’s internal control
system Status of activities of corporate auditors, the Internal Audit Office, and staff members indivisions or departments in charge of auditing matters of the Company’s subsidiaries oraffiliates Material accounting policies and accounting standards of the Company and changes
thereofThe Company 43

Details of announcements of operating results and operating forecasts, and details ofmaterial disclosure documents
 Operation and details of reports of the internal reporting system
 Behavior in violation of laws and regulations or the Articles of Incorporation, or fraudulent
behavior
 Matters entailing risk of inflicting substantial damage on the Company or a subsidiary
thereofc) The Company shall establish a system, as part of the “helpline” internal reporting system inorder to enable direct contact with the Company’s corporate auditors.
J. System to ensure that persons who have reported as aforementioned in section “I.” above are
not treated disadvantageously for making such reportsa) Compliance regulations applicable across the Group shall ensure protection of persons whoseek consultation or report issues.
b) The Company shall, within the “helpline” internal reporting system, set up an internalreporting contact point operated by an outside third-party entity, and shall establish asystem that enables directors and employees, as well as officers and employees ofsubsidiaries, to anonymously report to corporate auditors through that contact point.
K. Policy on procedures for prepaying or reimbursing expenses incurred by corporate auditors
in the course of executing their duties, and other matters involving handling of expenses ordebts incurred through execution of such dutiesa) The Company shall undertake budgetary measures annually with respect to audit expenses
necessary to ensure the smooth execution of corporate auditor duties.
b) The Company shall cover extraordinary expenses claimed by corporate auditors, such as
those incurred in enlisting the cooperation of outside specialists (such as lawyers andaccountants), unless the nature of the expense claimed is deemed unreasonable.
L. Other system necessary to ensure auditing of corporate auditors is effectively executeda) The Audit & Supervisory Board shall not only make the opportunity for hearings fromexecutive directors and important employees, but also make the opportunity for regularexchange of opinions from the Representative Director, President and Chief Executive
Corporate Officer and the accounting auditors.
b) Audit policies and important audit matters of respective fiscal years are to be reported to theBoard of Directors and shared with the directors.
Progress made in operating the internal control system
Details regarding the operational status of the internal control system for the current fiscal year
are summarized as follows.
a) System to ensure compliance with laws and regulations and the Articles of Incorporation
 Two of our Chinese subsidiaries have adopted and initiated operations of internalreporting systems. We are also laying the groundwork for introducing such systems to ourSoutheast Asian subsidiaries.
 To address risks associated with potential instances of bribery, we have established andinitiated operations of the anti-bribery regulations also at our Southeast Asian subsidiaries,
after having done so at our Chinese subsidiaries during the previous fiscal year.
b) System for managing risk of loss At its business offices in Japan and overseas, various sessions including crisis management
training sessions, media training sessions, and large-scale disaster response training
sessions (response involving backup offices and product supply training) were
implemented.
c) System to ensure effective execution of duties

44 The Company







We commenced full-scale implementation of our project to revamp core information
technology systems of the Group, with the aim of helping to build a robust managementbase looking toward the future.
We newly established the Nomination and Remuneration Committee as an advisory body to theBoard of Directors with the aim of enhancing objectivity, adequacy and transparency regarding
factors such as the composition of the Board of Directors and means of nominating andcompensating directors and others, so that it may in turn fuel the Group’s medium- to long-term
growth and increase its corporate value.
d) System necessary to ensure properness of operations in the corporate group We have established our Kewpie Group 2030 Vision, which is a long-term vision geared
to unifying the hopes of our entire workforce with our sights set on achieving the Group’s
goal. Meanwhile, we have formulated our Ninth Medium-term Business Plan (December
1, 2018 to November 30, 2021) which is geared to maintaining growth in Japan andaccelerating growth overseas.
 At business offices in Japan and overseas, by creating numerous opportunities for
explanation and discussion of the Group’s philosophy, starting with its motto and precepts,
the management themselves worked to spread awareness on the Group’s philosophy.
 We made progress with efforts that included selling and reorganizing business operations
and subsidiaries, as well as establishing a management company in China, with suchinitiatives carried out from the perspective of increasing corporate value and streamlining
governance of our subsidiaries.
e) System to ensure that corporate auditors perform audits effectively
The Company’s corporate auditors have been striving to assess the current status and issues ofinternal controls through efforts that include creating opportunities for regular exchange of
opinions and other dialogue among the President and Chief Executive Corporate Officer,
accounting auditors and the Internal Audit Office, as well as attending meetings of the Risk
Management Committee, the Compliance Committee and other such bodies.
Risk management system
The Company’s risk management basic policy has set specific, systematic procedures for risk
management, under which each responsible unit exercises continuous oversight of eachindividual risk factor. In addition, the Risk Management Committee shall share information
related to risk factors that affect the Company as a whole to comprehensively manage evaluationand prioritization of such risks, and countermeasures thereof. A crisis management manual has
been prepared to prepare for any foreseeable sudden risks to operations. In addition, in the eventof a sudden incident or emergency, an Emergency Headquarters will be established immediately
in accordance with the crisis management manual, to take action in order to deal swiftly andappropriately with the incident. The members of the Risk Management Committee include
representatives from each of the Company’s major subsidiaries. Furthermore, in order to manage
operating risks at subsidiaries, each subsidiary reports on its management risks to the directors
in charge of risk management, as needed.
In order to provide a solid legal compliance structure, the Company has established aCompliance Committee (chaired by the directors in charge of compliance issue, withadministrative work performed by members of the Internal Audit Office), which is at the centerof various compliance activities. The Committee chairman reports back to the Board of Directors
and the Audit & Supervisory Board on the status of compliance activities. In addition toestablishing and publically releasing a document entitled “Group Policies,” which explains topeople both within and outside the Group the core values and activities expected of groupcompanies, the Company also set up “helplines,” that employees of Group companies can use toreport information or seek guidance (there are many ways to contact this helpline, from bothwithin and outside the Company), and set up a Compliance Investigation Committee toinvestigate any suggestions of illegal activity. In order to ensure that all employees have been

The Company 45

instructed in, and have a proper understanding of what compliance entails, the Company has
been conducting a “Mind Up Program,” and has also been implementing employee awarenesssurveys (questionnaire format) every other year in order to assess how well employees of Group
companies understand compliance matters, and also to gauge their awareness and conduct in thatregard. In the event of non-compliance, such cases are fully reported (up to and including action
taken against employees or directors found to be at fault) to employees of the whole Company
and other Group companies, and companywide efforts are being implemented to prevent any
recurrence.
With regard to information security, the Company has established and in accordance with theregulations on the use of Company information, as well as basic principles on the protection of
personal information, as well as preparing operations manuals related to the storage andmanagement of such information. In addition, the Information Promotion Committee (headed by
the officer in charge of the Management Promotion Division or a person who is appointed by thesaid officer, with administrative work performed by the Management Promotion Division in
charge) conducts training sessions to teach employees proper information management
procedures, confirms that the specified procedures are being carried out, and reviews or revises
each information management regulation. The directors and corporate auditors have continuous
access right to documents and electronic information related to the deliberations and activities of
directors.
Status of the Nomination and Remuneration Committee
The Nomination and Remuneration Committee was established in August 2018 as an advisory
body to the Board of Directors with the aim of enhancing objectivity, adequacy and transparency
regarding matters such as the composition of the Board of Directors and the methods ofnomination and compensation of directors and other officers, so that it may contribute to theGroup’s medium- to long-term growth and improvement of its corporate value. The Nomination
and Remuneration Committee deliberates on the following matters, and makes decisions asnecessary, with respect to:(1) Structure of the management systems and member composition of the Board of Directors;(2) Criteria for election and dismissal of directors, corporate auditors, and corporate officers;(3) Nomination of respective candidates for positions as directors and corporate auditors;(4) Criteria for evaluating directors and corporate officers;(5) Design of compensation systems for directors and corporate officers; and(6) Other matters regarding the Group’s corporate governance as deemed necessary by the
Nomination and Remuneration Committee.
The Nomination and Remuneration Committee consists of no fewer than five members (theCompany’s directors and corporate auditors), and at least half of its members must consist ofoutside officers who meet the independence criteria. The committee’s members shall be electedby the resolution of the Board of Directors, and their term of office shall continue until theconclusion of the Company’s first Ordinary General Meeting of Shareholders to be held
subsequent to their appointment. The chairman of the committee shall be appointed by the
resolution of the Nomination and Remuneration Committee from among its members who are
outside directors, and shall undertake chairmanship of the committee.
As of February 28, 2019, the committee’s chairman and its members are as listed below.
<Chairman > Outside Director Kazunari Uchida＜Member＞
 Outside Director Kazunari Uchida Outside Director Shihoko Urushi
 Outside Corporate Auditor Kazumine Terawaki

46 The Company



Chairman Amane Nakashima
Representative Director, President and Chief Executive Corporate Officer Osamu Chonan
Director, Executive Corporate Officer Nobuo Inoue

Evaluation of the effectiveness of the Board of Directors
From December 2017 through January 2018, the Company implemented an evaluation of theeffectiveness of the Board of Directors (second evaluation) and worked to improve the operationof the Board of Directors based on those results. A summary of this process is as follows:(1) Implementation methods and details
 Covering all officers, we implemented a questionnaire using an external organization. The
questionnaire included items on “Capabilities of Respective Directors and Corporate
Auditors, and Composition Thereof, Etc.,” “Enhancement of Deliberations, Etc.,”“Cooperation with Stakeholders,” and “Overall and Other Matters” (10 questions in both
multiple-choice and free-response format). As such, we placed focus on evaluating efforts
for improvements made in fiscal year 2017, and eliciting opinions regarding the directionof further improvements in the changing business environments.
 The Board of Directors Office and external organization analyzed and evaluated the
responses to the questionnaire, and after reporting and sharing those results with theBoard of Directors, opinions were exchanged among attended officers at the meeting of
the Board of Directors.
(2) Evaluation results According to the evaluation results, improvements have generally been made in many
issues identified in the first effectiveness evaluation. However, further improvement forenhancement of deliberations of the Board meeting was recognized as an ongoingchallenge, and we have also become even more aware of the needs to address demands ofour stakeholders.
(3) Improvement initiatives
 In order to enhance deliberations at the Board of Directors, we have reduced time allocatedto reporting items and explanation of the proposals, while devoting more time toexchanging opinions on management issues.
 We held multiple executive training sessions geared to officers and other executive
personnel, and we have also expanded opportunities for our outside officers to participate
in internal business meetings and other such forums.
 We newly established the Nomination and Remuneration Committee as an advisory bodyto the Board of Directors with the aim of enhancing objectivity, adequacy, andtransparency regarding matters such as the composition of the Board of Directors and thenomination and compensation of directors and others. During the committee’s four
meetings held during the current fiscal year, its members exchanged opinions on matters
including the composition and diversity of the Board of Directors and basic design of
director bonus system.
From December 2018 to January 2019, the Company conducted a questionnaire, as theeffectiveness evaluation carried out during the current fiscal year (third evaluation), to officers
using an external organization (the questionnaire contained questions including evaluations ofinitiatives carried out during the current fiscal year, future challenges, and necessary initiatives
to be taken; it also included an evaluation of the effectiveness of the Nomination andRemuneration Committee).
Thereafter, after reporting and sharing the questionnaire results and evaluation by the externalorganization with the Board of Directors, opinions were exchanged among all officers at themeeting of the Board of Directors.

The Company 47

In the questionnaire, though the evaluation showed that many of the issues shared at theprevious evaluation of the effectiveness had been improved generally, future issues and plans forconcrete initiatives were again shared at the meeting of the Board of Directors and we will work
toward further improvements.
Going forward, the Company will implement an evaluation of the effectiveness of the Boardof Directors every year, and we will work to build a management framework that contributes tothe medium- to long-term development of the Group.
Lawyers, accounting auditors, and other third parties
When the management of the Company requires advice on legal matters, they consult their legal
advisors (lawyers).
In addition, the Company’s external auditor — Ernst & Young ShinNihon LLC — as part oftheir audit procedures, provides the Company with advice relating to issues in the sphere of theCompany’s accounts and general management. (The Representative Director, President and Chief
Executive Corporate Officer of the Company regularly discusses such issues with accountants ofErnst & Young ShinNihon LLC). Neither Ernst & Young ShinNihon LLC as a corporate entity nor
its accountants as individuals, have any particular interests in the Company that would cause
conflict of interest in the performance of their contractual duties.
Audit work for the Company during the reporting period was executed by the three certified
public accountants listed below, assisted by forty other qualified persons, including nineteen
CPAs and twenty-one other qualified persons.
Names & titles of CPAs
Yoshimi Kimura
Designated and Engagement Partner
Yoshiyuki Sakuma
Designated and Engagement Partner
Miyuki Nakamura
Designated and Engagement Partner

Audit firm to which the CPA belongs
Ernst & Young ShinNihon LLC
Ernst & Young ShinNihon LLC
Ernst & Young ShinNihon LLC(Notes) 1. The number of successive years in which CPAs have engaged in the accounts of the Company has been omitted, as no CPAs
have engaged in these accounts for more than seven years.
2. The audit firm noted above takes measures so that its engagement partners do not engaged in the accounting audits of theCompany on a consecutive basis for over a certain number of years.

(b) Status of internal audits and corporate auditor audits
The Audit & Supervisory Board determines the auditing policies as well as the division of
responsibilities among corporate auditors, and each corporate auditor complies with the Board’s
policy directives and sits in on meetings of the Board of Directors and other importantmanagement meetings. Corporate auditors hear business reports from individual directors andperuse the documents employed in the process of reaching decisions on important matters.
Corporate auditors conduct on-site investigations at the Company’s Head Office and otherimportant business places regarding business performance and financial position. Corporate
auditors also request reports from the managements of the Company’s subsidiaries on theirbusiness performance. When deemed necessary, corporate auditors visit subsidiaries toinvestigate the performance of their business and their financial position at first hand. The twostanding corporate auditors simultaneously act as corporate auditors for the Company’s main
subsidiaries. Regular meetings are held between the Audit & Supervisory Board and theRepresentative Director, President and Chief Executive Corporate Officer of the Company, andextraordinary meetings may be held when necessary: these meetings are utilized to exchange
opinions regarding proposals covering the whole range of the Company’s business activities.
The Company has set up an Internal Audit Office to act as its internal auditing unit with 11
staff members. The staff of the Internal Audit Office perform auditing – in line with the directives
laid down in the auditing plan for each year, as well as in accordance with requests received fromthe Representative Director, President and Chief Executive Corporate Officer, the director in
charge of the Internal Audit Office or corporate auditors – to confirm that organized activities

48 The Company

throughout the Group are being carried out properly and efficiently in conformity with the laws
and regulations, or in line with the Company’s own internal regulations and the management’s
policies. If required, the Internal Audit Office cooperates with corporate auditor as well as
accounting auditors by exchanging information and other actions. Auditing activities are also
conducted in cooperation with staff members of the Company who are in charge of the auditingof matters relating to product quality, environmental protection, safety and labor.
(c) Outside directors and outside corporate auditor
The Company has two outside directors and two outside corporate auditors.
Outside director Mr. Kazunari Uchida has long-standing experience as a corporate
management consultant and has a strong expertise on corporate management and broad insight.
In addition, Mr. Uchida is an external Director of Lion Corporation and an Outside Director of
Sompo Japan Nipponkoa Insurance Inc. The Company has no business relationships with Lion
Corporation. The Company has a business relationship with Sompo Japan Nipponkoa InsuranceInc., but to the extent of normal transactions. Accordingly, there is no special interest between the
Company and any of the two companies. He satisfies the Company's "Independence Criteria for
Outside Officers." Consequently, there is no risk of this having an impact on his independence.
Outside director Ms. Shihoko Urushi has abundant experience as an educator combined withbroad insight as a corporate executive. In addition, Ms. Urushi is Outside Director of Culture
Convenience Club Co., Ltd. There is no special interest between the Company and the said
company. She satisfies the Company's "Independence Criteria for Outside Officers" as well.
Consequently, there is no risk of this having an impact on her independence.
Outside corporate auditor Ms. Emiko Takeishi has experience in the sector of public
administration and broad knowledge about personnel systems and labor policies. Although Ms.
Takeishi is Outside corporate auditor of Tokio Marine & Nichido Fire Insurance Co., Ltd. and theCompany has a business relationship, it is a regular business relationship and there are no special
interests between the two companies. Consequently, it has no impact on the independence of Ms.
Takeishi.
Outside corporate auditor Mr. Kazumine Terawaki has specialist knowledge and broad
insight as a legal expert. In addition, Mr. Terawaki is a corporate auditor of The Shoko Chukin
Bank, Ltd. There is no special interest between the Company and the said company. He satisfies
the Company’s “Independence Criteria for Outside Officers" as well. Consequently, there is norisk of this having an impact on his independence.
The Company stipulates the following as its criteria on independence for the purpose of
appointing outside directors and outside corporate auditors.
<Independence Criteria for Outside Officers>
To judge the independence of outside directors and outside corporate auditors as stipulated in
the Companies Act, we check the requirements for independent officers stipulated by the Tokyo
Stock Exchange, Inc. as well as checking whether the following items apply.
(1) A major shareholder of the Company (holding 10% or more of voting rights either directly
or indirectly), or a person who executes business for a major shareholder of the Company(*1)(2) A person/entity for which the Group is a major client, or a person who executes business forsuch person/entity (*2)(3) A major client of the Group or a person who executes business for such client (*3)(4) A person who executes business for a major lender of the Group (*4)(5) A senior partner or partner of the accounting auditor for the Company(6) A provider of expert services, such as a consultant, attorney at law, or certified public
accountant, who receives cash or other financial benefits exceeding ¥10 million in one
business year other than officer compensations from the Company

The Company 49(7)

A person/entity receiving contributions from the Group exceeding ¥10 million in one
business year, or a person who executes business for such person/entity(8) A person to whom any one of (1) to (7) above has applied in the past three business years(9) Where any of (1) to (8) above apply to a key person, and his or her immediate relatives, which
includes his or her grandparents, grandchildren, siblings, spouse and his or her grandparents,
siblings and grandchildren (*5)(10) A special reason other than the preceding items that will prevent the person from performing
their duties as an independent outside officers, such as the potential for a conflict of interest
with the Company.
*1

*2

*3
*4
*5

A person who executes business means an executive director, executive officer, corporate officer, orother employee, etc.
A person/entity for which the Group is a major client means a person/entity who receives paymentsfrom the Group amounting to at least the higher of either 2% of the consolidated net sales of the clientor ¥100 million.
A major client of the Group means a client that makes payments to the Group amounting to at least thehigher of either 2% of the Company's consolidated net sales or ¥100 million.
A major lender of the Group means a lender named as a major lender in the Group's business report.

A key person means a director (excluding outside directors), corporate auditor (excluding
outside corporate auditor), executive officer, corporate officer, or other person in the rank ofsenior general manager or above, or a corporate officer corresponding to these positions.

The Company works to secure outside directors and outside corporate auditors that have a highdegree of independence from an objective viewpoint. In that regard, the Company has registered
four such individuals with the Tokyo Stock Exchange, Inc. as independent officers who pose norisk involving conflict of interests with ordinary shareholders, including Mr. Kazunari Uchida
and Ms. Shihoko Urushi as outside directors, and Ms. Emiko Takeishi and Mr. Kazumine
Terawaki as outside corporate auditors.
As such, the Company judges that the current structure is one under which management
supervision functions adequately in terms of objectivity and neutrality from an outside
perspective, which are considered important for corporate governance.
(d) Policies and procedures for election and dismissal of directors and corporate auditors<Policy for Nomination of Director Candidates>
The Board of Directors of the Company, in order to respond to the trust placed by theshareholders, shall have the responsibility to respect the corporate philosophy, promotesustainable corporate growth and the improvement of the medium- to long-term corporate value,and enhance profitability and capital efficiency. Concerning the election of directors, the Board of
Directors has set forth the following criteria through which the persons deemed capable offulfilling these responsibilities are nominated as candidates.
(Inside director)
1. Must respect the corporate philosophy of the Company and embody its values.
2. Must possess abundant knowledge on domestic and international market trends concerning
the Group business.
3. Must have a strong ability for objective managerial judgment and business execution that willcontribute beneficially to the Group's management direction.
(Outside director)
1. Must provide a guiding role in particular fields, such as legal affairs, corporate management,
overseas business, human resource development, and CSR and have abundant experience andexpertise in these fields.
2. Must have a keen interest in the corporate philosophy and business of the Company, andpossess the ability to express opinions, provide guidance and advice, and carry out
supervision with respect to the inside directors in a timely and appropriate manner.

50 The Company

3. Must secure sufficient time to perform his or her duties as an outside director of the Company.
<Policy for Nomination of Corporate Auditor Candidates>
The corporate auditors, in order to respond to the trust placed by the shareholders, have
responsibilities to prevent violations of laws and regulations and the Articles of Incorporationand maintain and improve the soundness of the Group's management and its trust from society.
Concerning the election of Corporate Auditors, the Board of Directors has set forth the following
criteria through which the persons deemed capable of fulfilling these responsibilities arenominated as candidates.
(Inside Corporate Auditor)
1. Must respect the corporate philosophy of the Company and embody its values.
2. Must maintain a fair and unbiased stance and possess the capability to fulfill auditing duties.
3. Must understand the Group operations in general and be able to propose management tasks.
(Outside Corporate Auditor)
1. Must provide a guiding role in particular fields, such as legal affairs, corporate management,
accounting, overseas business, human resource development, and CSR and have abundant
experience and expertise in these fields.
2. Must have a keen interest in the corporate philosophy and business of the Company, andpossess the ability to express opinions, provide guidance, and carry out supervision withrespect to the directors from an objective and fair standpoint.
3. Must secure sufficient time to perform his or her duties as an outside Corporate Auditor of
the Company.
<Procedures for Nomination of Directors, Corporate Auditors, and Corporate Officers>
The proposal for nomination of candidates for directors, corporate auditors and corporate officers
is submitted to the Nomination and Remuneration Committee (an advisory body to the Board of
Directors, which shall be chaired by an outside director and have a composition where at least
half of members are outside officers who meet the independence criteria). Subsequently, thecandidates recommended by the committee are reviewed and decided upon at a Board of
Directors meeting.
As for the candidates for Corporate Auditors, election propositions for the General Meeting of
Shareholders must be approved by the Audit & Supervisory Board pursuant to stipulations in the
Companies Act.
<Policies and Procedures for Dismissal of Corporate Officers>
The Board of Directors of the Company may seek resignation or otherwise dismiss a corporate
officer (including corporate officers with special titles such as President at the top) in the eventthat any one of the following items applies. Matters involving dismissal of a corporate officer are
to be deliberated on and decided by the Board of Directors, subsequent to discussion in a meetingof the Nomination and Remuneration Committee.
1. The individual has engaged in an act of fraud, impropriety, perfidy or breach of trust as acorporate officer;
2. The individual has shown a lack of competence as a corporate officer;
3. The professional duties of a corporate officer performed by the individual have been
insufficient in terms of implementation or results thereof, and the Board of Directors has
deemed that it would be inappropriate for him or her to continue performing his or her duties
as a corporate officer; or
4. The individual has behaved or otherwise engaged in language and conduct unbecoming to a
corporate officer.
(e) Compensation of officers

The Company 51(i) The total compensation of officers by type, total compensation by classification, and numberof people receiving compensation

Type of officers
Directors (excluding outside directors)
Corporate auditors (excluding outside
corporate auditors)
Outside officers(Note)

Total compensation(millions of yen)360

Total compensation by classification(millions of yen)
Basic compensation
Bonuses302
57

Number of people
receivingcompensation
10

48

48

—

3

54

54

—

7

The compensation amounts listed above exclude employee salaries (including bonuses) of those serving concurrently as employee anddirector.

(ii) Details and decision-making method of policy concerning compensation amounts of officers
and calculation method thereof
The compensation paid to directors is in the form of monthly compensation and bonuses. The
monthly compensation is decided separately according to each director’s status and is limited
within the scope of the compensation limit resolved by the General Meeting of Shareholders.
Bonuses are not paid to the outside directors.
The compensation paid to corporate auditors is in the form of monthly compensation only.
The individual compensation amounts are decided through negotiation with corporate
auditors within the scope of the compensation limit resolved by the General Meeting of
Shareholders.
The rationale and calculation methods with respect to compensation of the directors andcorporate auditors are as follows:<Policy for Determining Compensation of Directors, Corporate Auditors, and Corporate Officers>
1. Rationale and procedures for compensation of officers, and corporate officers
1) The Company institutes a compensation system for compensation of directors andcorporate officers that consists of monthly remuneration and bonuses, which is linked
with the Company’s performance and reflects their responsibilities and achievements.
2) The Company discusses the rationale (system design) at the meeting of Nomination andRemuneration Committee, and improves its objectivity, appropriateness andtransparency.
3) The total amount of bonuses paid to directors must be approved at a General Meeting of
Shareholders.
4) The amounts of compensations paid to outside directors and corporate auditors (insideand outside) shall respectively be fixed and no bonuses will be paid.
2. Calculation method for monthly remuneration
1) A monthly remuneration for director duties of inside directors will be paid at a flat rate;
provided, however, that a separate, additional remuneration be paid to the persons withrepresentative authority.
2) The monthly remuneration as corporate officers should be set at a suitable level that takes
into consideration the Company’s management environment, etc. and correspond to therank (President, Senior Executive Corporate Officer, Executive Corporate Officer, andSenior Corporate Officer).
3. Calculation method for bonuses
1) The bonus amount is calculated according to the rank of the directors and corporate
officers, using the consolidated operating income and the goal attainment levels of theindividual and the division for which they are responsible, as an indicator.
2) During the respective fiscal years covered under the Ninth Medium-term Business Plan(the fiscal year ending November 30, 2019 to the fiscal year ending November 30, 2021),
the Company has set the weight of bonuses to no less than 30% of the basic amount of
total annual remuneration with the aim of achieving sustainable growth of the Group. In

52 The Company

3)

(f)

addition, criteria and allocations with respect to performance evaluation indicators set
on an individual basis are to align with intent of the Ninth Medium-term Business Plan.
The Company may increase or decrease the bonus amount paid for the final fiscal yearof the Ninth Medium-term Business Plan, depending on an individual progress made inachieving the performance goals previously set for the final fiscal year on an individual
basis.

Status of individuals who have retired from the position of Representative Director, President
and Chief Executive Corporate Officer, etc.
The Company has not currently appointed an Executive Corporate Adviser.
The Company, where the President and Chief Executive Corporate Officer recognizes a
specific business need, shall, in accordance with the required internal procedures, delegate aretired President and Chief Executive Corporate Officer as an Executive Corporate Adviser, or aretired officer as a Corporate Adviser.
The Executive Corporate Adviser, mainly for the smooth succession of management, shallprovide advice where requested by the President and Chief Executive Corporate Officer, and shallfulfill other duties as requested by the President and Chief Executive Corporate Officer, including
industry group activities and activities to maintain relationships with business partners.
Furthermore, a Corporate Adviser will be delegated particularly when there is a specific mission
to be requested based on the Corporate Adviser’s knowledge and experience during their time as
officer.
Neither the Executive Corporate Adviser nor the Corporate Adviser have authority in thedecision-making process of management, neither do they attend meetings of the Management
Council or other internal meetings.
The terms shall be in principle one-year term with a maximum of two years for the Executive
Corporate Adviser and a maximum of one year for the Corporate Adviser, meaning retired
officers do not maintain long-term business relationships with the Company.
Furthermore, in terms of internal procedures, the delegation of the Executive Corporate
Adviser requires a resolution by the Board of Directors, and the delegation of the Corporate
Adviser requires a decision by the President and Chief Executive Corporate Officer reported to
the Board of Directors.

(g) Status of shareholdings(i) Investment shares held for purposes other than pure investment
Number of issues: 120 issues
Total book value on the balance sheet: ¥23,261 million(ii) Holding classification, issue, number of shares, book value on the balance sheet, and purposeof shareholding for investment shares held for purposes other than pure investment

The Company 53

Previous fiscal year
Specified investment shares
Issue

Number of sharesBook value on
the balance sheet(millions of yen)

Nichirei Corporation

1,554,500

5,067

Kato Sangyo Co., Ltd.

840,300

3,399

Saha Pathanapibul PublicCo., Ltd.

16,072,583

2,888

Nisshin Seifun Group Inc.

1,003,981

2,204

Kikkoman Corporation

374,000

1,645

507,000

1,333

385,000

985

internet infinity INC.

240,000

653

Seven & i Holdings Co., Ltd.

124,600

573

Inageya Co., Ltd.

307,591

566

Yoshinoya Holdings Co.,Ltd.

295,098

549

Sumitomo Mitsui Financial
Group, Inc.

112,483

511

Mitsubishi UFJ Financial
Group, Inc.

495,500

392

Mizuho Financial Group,Inc.

1,807,200

368

39,600353

50,000350

Toho Co., Ltd.

110,000

301

Casio Computer Co., Ltd.

181,000

297

KAGOME CO., LTD.

54,200225

Morozoff Limited

30,000224

Dai-Ichi Life Holdings, Inc.

74,200170

TAKARA HOLDINGS INC.

125,000

157

Showa Sangyo Co., Ltd.

53,600154

Kirin Holdings Company,
LimitedOno Pharmaceutical Co.,Ltd.

Taisho Pharmaceutical
Holdings Co., Ltd.
Kadoya Sesame Mills
Incorporated

Purpose of shareholding
To strengthen trading
relationshipTo strengthen trading
relationshipTo strengthen business
relationshipTo strengthen trading
relationshipTo strengthen trading
relationshipTo strengthen trading
relationshipTo strengthen business
relationshipTo strengthen business
relationshipTo strengthen trading
relationshipTo strengthen trading
relationshipTo strengthen trading
relationshipTo maintain stable trading
relationship with financial
institution
To maintain stable trading
relationship with financial
institution
To maintain stable trading
relationship with financial
institution
To strengthen business
relationshipTo strengthen trading
relationshipTo strengthen trading
relationshipTo strengthen business
relationshipTo strengthen trading
relationshipTo strengthen trading
relationshipTo strengthen business
relationshipTo strengthen trading
relationshipTo strengthen trading
relationship54 The Company

Stocks regarded as holding shares
Issue

Number of sharesBook value on
the balance sheet(millions of yen)

Toyo Suisan Kaisha, Ltd.

728,000

3,479

Seven & i Holdings Co., Ltd.

485,000

2,233

Sumitomo Corporation

654,000

1,140

299,000

1,022

475,000

1,011

Yamato Holdings Co., Ltd.

219,000

500

Aeon Co., Ltd.

220,000

401

Mitsubishi Shokuhin Co.,Ltd.
Kyowa Hakko Kirin Co.,Ltd.

Purpose of shareholding
Power to exercise voting
rightsPower to exercise voting
rightsPower to exercise voting
rightsPower to exercise voting
rightsPower to exercise voting
rightsPower to exercise voting
rightsPower to exercise voting
rightsThe Company 55

Current fiscal year
Specified investment shares
Issue

Number of sharesBook value on
the balance sheet(millions of yen)

Nichirei Corporation

1,554,500

4,982

Kato Sangyo Co., Ltd.

840,300

2,953

Kikkoman Corporation

374,000

2,475

Nisshin Seifun Group Inc.

1,003,981

2,394

5,719,331

1,267

5,219,737

929

Seven & i Holdings Co., Ltd.

124,600

615

Yoshinoya Holdings Co.,Ltd.

295,915

576

Inageya Co., Ltd.

308,495

488

Sumitomo Mitsui Financial
Group, Inc.

112,483

470

Mizuho Financial Group,Inc.

1,807,200

339

Mitsubishi UFJ Financial
Group, Inc.

495,500

309

Kadoya Sesame Mills
Incorporated

50,000292

Toho Co., Ltd.

110,000

263

Aeon Co., Ltd.

70,385191

internet infinity INC.

240,000

181

TAKARA HOLDINGS INC.

125,000

180

KAGOME CO., LTD.

54,200179

Morozoff Limited

30,000164

FUJI OIL HOLDINGS INC.

45,100163

Showa Sangyo Co., Ltd.

53,600152

Dai-Ichi Life Holdings, Inc.

74,200146

Casio Computer Co., Ltd.

90,500143

Saha Pathana Inter-Holding
Public Company Limited
Saha Pathanapibul PublicCo., Ltd.

Purpose of shareholding
To strengthen trading
relationshipTo strengthen trading
relationshipTo strengthen trading
relationshipTo strengthen trading
relationshipTo strengthen business
relationshipTo strengthen business
relationshipTo strengthen trading
relationshipTo strengthen trading
relationshipTo strengthen trading
relationshipTo maintain stable trading
relationship with financial
institution
To maintain stable trading
relationship with financial
institution
To maintain stable trading
relationship with financial
institution
To strengthen trading
relationshipTo strengthen trading
relationshipTo strengthen trading
relationshipTo strengthen business
relationshipTo strengthen trading
relationshipTo strengthen trading
relationshipTo strengthen trading
relationshipTo strengthen trading
relationshipTo strengthen trading
relationshipTo strengthen business
relationshipTo strengthen business
relationship56 The Company

Stocks regarded as holding shares
Issue

Number of sharesBook value on
the balance sheet(millions of yen)

Toyo Suisan Kaisha, Ltd.

728,000

2,831

Seven & i Holdings Co., Ltd.

485,000

2,397

Sumitomo Corporation

654,000

1,140

475,000

1,105

299,000

916

Yamato Holdings Co., Ltd.

219,000

659

Aeon Co., Ltd.

220,000

598

Kyowa Hakko Kirin Co.,Ltd.
Mitsubishi Shokuhin Co.,
Ltd.

(Notes)Purpose of shareholding
Power to exercise voting
rightsPower to exercise voting
rightsPower to exercise voting
rightsPower to exercise voting
rightsPower to exercise voting
rightsPower to exercise voting
rightsPower to exercise voting
rights

1. Specified investment shares and stocks regarded as holding shares are not added together at the stage of selecting the top issues in termsof book value on the balance sheet.
2. Stocks regarded as holding shares are put into a trust to cover retirement benefit obligations. The amounts presented in the “Book valueon the balance sheet” column are obtained by multiplying the market value as of the end of the current fiscal year by the number ofshares that confer the power to exercise voting rights. The information presented in the “Purpose of shareholding” column describes thepower the Company holds with respect to such shares.

(iii) Investment shares for pure investment purposes
Not applicable.
(h) Overview of content of limited liability contract
In accordance with the provisions of Article 427, Paragraph 1 of the Companies Act and Article
28 of the Articles of Incorporation, the Company and its outside directors have entered into alimited liability contract. Also, in accordance with the provisions of Article 427, Paragraph 1 of
the Companies Act and Article 38 of the Articles of Incorporation, the Company and each of its
outside corporate auditors have entered into a limited liability contract. The amount of maximum
liability stipulated in the contract is determined by each of the respective items under Article 425,
Paragraph 1 of the Companies Act.
However the limitation of liability is applicable only in cases where the outside directors andoutside corporate auditors have performed their respective duties in good faith and without grossnegligence.
(i)

Number of directors
The Articles of Incorporation of the Company stipulate that the number of Company’s directors
is limited to not more than twenty members.

(j)Election and dismissal of directors
The Articles of Incorporation of the Company stipulate that election and dismissal of directors
shall be made by the majority of the votes of the shareholders present at the meeting where theshareholders holding one third or more of the votes of the shareholders entitled to exercise theirvotes at such shareholders meeting are present, and prohibits the resolution of election of
directors based on cumulative voting.

(k) Agenda at the General Meeting of Shareholders that can be decided by the Board of Directors
 Dividends from surplus
As for matters listed in items of Article 459, Paragraph 1 of the Companies Act regarding
dividends from surplus, the Articles of Incorporation of the Company stipulate that the Boardof Directors reserves the right to make a resolution unless otherwise provided for in laws andThe Company 57

regulations. This is intended to realize mobile implementation of measures regarding
dividend and capital policy.
(l)Exceptional agenda for resolutions at the General Meeting of Shareholders
As for exceptional agenda at the General Meeting of Shareholders provided for in Article 309,
Paragraph 2 of the Companies Act, the Articles of Incorporation of the Company stipulate thatthe resolutions of those General Meetings of Shareholders shall be made by two thirds or more of
the votes of the shareholders present at the meeting where the shareholders holding one third or
more of the votes of the shareholders entitled to exercise their votes at such shareholders meetingare present. This is intended to facilitate the operation of the General Meetings of Shareholders
by relaxing the restrictions imposed by the required number of shareholders present.

Fees for auditing certificated public accountants(a) Details of fees for auditing certificated public accountants

Classification

The Company
Consolidated
subsidiaries
Total

Previous fiscal year
Fees fornon-audit services(millions of yen)

Fees for audit orattestation services(millions of yen)

Current fiscal year
Fees for audit orFees forattestation services
non-audit services(millions of yen)(millions of yen)

92

2

92

2

84

0

80

0

176

2

172

2

(b) Other important details on fees
Fees paid to Ernst & Young, part of the same network as the auditing certificated public
accountants of the Company, Ernst & Young ShinNihon LLC, by the Company and its
consolidated subsidiaries was ¥60 million for audit services and ¥7 million for non-audit services,in the previous fiscal year, and ¥56 million for audit services and ¥6 million for non-audit services,in the current fiscal year.
(c) Non-audit services performed by auditing certificated public accountants for the Company
For services other than those provided in Article 2, Paragraph 1 of the Certified Public
Accountants Law, the Company entrusts to the auditing certificated public accountants advisory
services regarding preparation of the English-language financial statements, and pays fees to theauditing certificated public accountants for those services, in the previous fiscal year and current
fiscal year.
(d) Policy for determining fees for auditing
The fees to auditing certificated public accountants of the Company is determined based on averification of the scope, content and days, etc. of the audit plan of the auditing certificated public
accountants and approved by the Audit & Supervisory Board in accordance with the provisionsof the Companies Act.

58 Financial Information

V. Financial Information
5. Preparation of the consolidated financial statements
The consolidated financial statements of the Company were prepared in accordance with the Regulation
on Terminology, Forms and Preparation Methods of Consolidated Financial Statements (Order of the
Ministry of Finance No. 28 of 1976).

6. Audit
The audits were performed by Ernst & Young ShinNihon LLC on the consolidated financial statements
for the fiscal year (from December 1, 2017 to November 30, 2018) in accordance with Article 193-2,
Paragraph 1 of the Financial Instruments and Exchange Law.
On July 1, 2018, Ernst & Young ShinNihon LLC, the accounting auditor of the Company, changed its
Japanese corporate name from ShinNihon Yugen Sekinin Kansa Hojin to EY ShinNihon Yugen Sekinin Kansa
Hojin. Its English name is unchanged.

7. Special measures for ensuring appropriateness of consolidated financial statements
The Company carries out special measures for ensuring appropriateness of consolidated financial
statements. Specifically, for the purpose of both ensuring that the Company has an appropriate grasp of
the contents of the accounting standards, and establishing a system by which it is possible to accurately
respond to changes in accounting standards, the Company became a member of the Financial
Accounting Standards Foundation, deepens its understanding of accounting standards and takes
measures in response to new accounting standards.

Financial Information 59

Consolidated Financial Statements
Consolidated financial statements(a) Consolidated Balance Sheets(Millions of yen)Previous fiscal year
(As of November 30, 2017)

Current fiscal year
(As of November 30, 2018)

AssetsCurrent assets
Cash and deposits

29,61838,493

Notes and accounts receivable –– trade78,212

77,034

Securities

12,0009,500

Purchased goods and products

16,355

16,695Work in process
Raw materials and supplies

972

963

11,377

10,595

Deferred tax assets

2,823

3,024

Other

5,192

5,566

Allowances for doubtful accounts
Total current assets

(222)

(446)

156,332

161,426

Fixed assets
Tangible fixed assets
Buildings and structures*4

Accumulated depreciation
Net book value
Machinery, equipment and vehicles

181,314(106,708)

81,030*2

74,605*4

170,766*4

175,809(121,373)

Net book value(123,835)

49,393*2, *4

Lease assets
Accumulated depreciation
Net book value
Construction in progress
Other

*4

*2

Accumulated depreciation
Land

185,446(104,416)*4

Accumulated depreciation

49,82051,974*2, *4

8,966(4,257)(4,205)

5,472

4,761

4,571

11,22315,707*4(11,248)

Net book value

52,084

9,729

16,183(11,977)

4,459

4,206

194,746

198,856

Goodwill

3,778

1,233

Software

3,210

4,322

Other

1,369

737

Total intangible fixed assets

8,359

6,293

Total tangible fixed assets
Intangible fixed assets

Investments and other assets
Investment securities*1

34,495*1

29,673Long-term loans receivable

519

879

Assets for retirement benefits

12,63011,552

Deferred tax assets

2,027

2,424

Other

*1

10,278*1

10,449Allowances for doubtful accounts

(182)

(181)

Total investments and other assets

59,76954,797

Total fixed assets
Total assets

262,875

259,946

419,207421,373

60 Financial Information(Millions of yen)Previous fiscal year
(As of November 30, 2017)

Current fiscal year
(As of November 30, 2018)

Liabilities
Current liabilities
Notes and accounts payable –– trade
Short-term loans payable

48,008*2

8,037

44,518*2

9,496

Current portion of bonds—

10,000Accounts payable –– other17,547

17,025

Accrued expenses

6,533

6,462

Accrued income taxes

4,005

6,775

Deferred tax liabilities

11

15

Reserves for sales rebates

801

831

Reserves for bonuses

1,831

1,937

Reserves for directors’ bonuses

121

116

Other reserves

100

52

Other

3,699

3,672

Total current liabilities

90,697

100,903

Non-current liabilities
Bonds
Long-term loans payable

10,000*2

35,947—*2

36,664

Lease obligations

4,506

Deferred tax liabilities

9,068

7,722

Liabilities for retirement benefits

3,147

3,546

Asset retirement obligations

1,120

1,123

Other

1,286

1,508

Total non-current liabilities

65,07754,370155,775

155,273

Total liabilities

3,804

Net assets
Shareholders’ equity
Paid-in capital

24,104

24,104

Capital surplus

29,42529,543

Earned surplus

170,583

183,431

Treasury stock(6,603)(15,859)

Total shareholders’ equity

217,509221,219

13,42910,618

Accumulated other comprehensive income
Unrealized holding gains (losses) on securities
Unrealized gains (losses) on hedges

(3)

(28)

Foreign currency translation adjustments(1,141)(1,459)

Accumulated adjustments for retirement benefits(3,354)(4,018)

Total accumulated other comprehensive income

8,929

5,112

Non-controlling interests

36,992

39,768

Total net assets

263,432

266,100

419,207421,373

Total liabilities and net assets

Financial Information 61(b) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income(Millions of yen)Previous fiscal year
(From December 1, 2016
to November 30, 2017)
Net sales
Cost of sales

561,688*1

Gross profit
Selling, general and administrative expenses

Current fiscal year
(From December 1, 2017
to November 30, 2018)432,773573,525*1

128,915*2, *3Operating income

97,654440,378
133,146*2, *3100,078

31,26133,067

Interest income

69

82

Dividends income

514

515

Equity in earnings of affiliates

93

130

Non-operating income

Subsidy income

269

303

Other

1,215

1,100

Total non-operating income

2,162

2,132

Interest expenses

376

341

Foreign exchange losses—

88

Non-operating expenses

Business commencement expenses

139

13

Other

395

406

Total non-operating expenses
Ordinary income

911

850

32,51134,349

1,179

3,670

Extraordinary gains
Gains on sales of investment securities
Gains on transfer of business
Gains on sales of fixed assets

*5

Other
Total extraordinary gains

—

*4

670

87

*5

137

65

109

1,331

4,587

Extraordinary losses
Losses on impairment of fixed assets

*6

581

*6

2,983

Losses on disposal of fixed assets

*7

1,062

*7

1,016

Losses on termination of retirement benefit plans

*8

1,309

—

107

1,349

Other
Total extraordinary losses

3,060

5,350

Profit before income taxes

30,78333,586

Income taxes

8,926

11,998296(275)

Income taxes –– deferred
Total income taxes

9,223

11,722

Profit21,56021,863

Profit attributable to non-controlling interests

3,460

3,542

Profit attributable to owners of parent

18,09918,32062 Financial Information

Consolidated Statements of Comprehensive Income(Millions of yen)Previous fiscal year
(From December 1, 2016
to November 30, 2017)

Current fiscal year
(From December 1, 2017
to November 30, 2018)

21,56021,863

Unrealized holding gains (losses) on securities

4,591(2,903)

Unrealized gains (losses) on hedges

(102)

(22)

Foreign currency translation adjustments

3,383

(391)

ProfitOther comprehensive income

Adjustments for retirement benefits
Total other comprehensive income
Comprehensive income

4,465
*

12,337(758)*(4,076)33,897

17,786Comprehensive income attributable to owners of parent

29,456

14,503Comprehensive income attributable to non-controllinginterests

4,441

3,283

(Breakdown)Financial Information 63(c) Consolidated Statements of Changes in Net Assets
Previous fiscal year (From December 1, 2016 to November 30, 2017)(Millions of yen)

Shareholders’ equity

Balance at the beginning of
the current fiscal year
Changes of items during the
fiscal year
Dividends from surplus
Profit attributable to ownersof parent
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Change of scope of
consolidation
Change of scope of equity
methodIncrease by company split
Net changes of items otherthan shareholders’ equity
Total changes of items during
the fiscal year
Balance at the end of thecurrent fiscal year

Paid-in capital

Capital surplus

Earned surplus

Treasury stock

Total shareholders’equity24,10430,300166,765(6,123)215,047(5,639)(5,639)18,09918,099(875)(1,897)(6,745)(9,999)
2,773
6,745

(9,999)
1
—

—

(875)

3,818

(480)

2,462

24,10429,425

170,583(6,603)

217,509

64 Financial Information

Accumulated other comprehensive income
Unrealized
Unrealized
holding gains
gains (losses)(losses) onon hedges
securities
Balance at the beginning of
the current fiscal year
Changes of items during the
fiscal year
Dividends from surplus
Profit attributable to ownersof parent
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Change of scope of
consolidation
Change of scope of equity
methodIncrease by company split
Net changes of items otherthan shareholders’ equity
Total changes of items during
the fiscal year
Balance at the end of thecurrent fiscal year

8,916

79

Total
NonForeign
Accumulated
accumulated controllingcurrency
adjustments
otherinterests
translation for retirement
comprehenadjustments
benefits
sive income(3,947)(7,474)(2,426)33,240Total net
assets245,861(5,639)18,099(9,999)
1
—
—

—
—
—
4,513

(82)

2,805

4,119

11,356

3,752

15,108

4,513

(82)

2,805

4,119

11,356

3,752

17,57013,429(3)(1,141)(3,354)

8,929

36,992

263,432

Financial Information 65

Current fiscal year (From December 1, 2017 to November 30, 2018)(Millions of yen)

Shareholders’ equity

Balance at the beginning of
the current fiscal year
Changes of items during the
fiscal year
Dividends from surplus
Profit attributable to ownersof parent
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Change of scope of
consolidation
Change of scope of equity
methodIncrease by company split
Net changes of items otherthan shareholders’ equity
Total changes of items during
the fiscal year
Balance at the end of thecurrent fiscal year

Paid-in capital

Capital surplus

Earned surplus

Treasury stock

Total shareholders’equity24,10429,425

170,583(6,603)

217,509(5,514)(5,514)

18,32018,320(9,255)

118(9,255)

118

(4)

(4)

(3)

(3)

49

49

—

118

12,848(9,255)

3,710

24,10429,543

183,431(15,859)

221,219

66 Financial Information

Accumulated other comprehensive income
Unrealized
Unrealized
holding gains
gains (losses)(losses) onon hedges
securities
Balance at the beginning of
the current fiscal year
Changes of items during the
fiscal year
Dividends from surplus
Profit attributable to ownersof parent
Purchase of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Change of scope of
consolidation
Change of scope of equity
methodIncrease by company split
Net changes of items otherthan shareholders’ equity
Total changes of items during
the fiscal year
Balance at the end of thecurrent fiscal year

13,429(3)

Total
NonForeign
Accumulated
accumulated controllingcurrency
adjustments
otherinterests
translation for retirement
comprehenadjustments
benefits
sive income(1,141)(3,354)

8,929

36,992

Total net
assets263,432(5,514)
18,320(9,255)
—
—
118

(4)
(3)
49
(2,811)

(24)

(317)

(663)

(3,817)2,775(1,042)(2,811)

(24)

(317)

(663)

(3,817)

2,775

2,667

10,618(28)(1,459)(4,018)5,112

39,768266,100

Financial Information 67(d) Consolidated Statements of Cash Flows(Millions of yen)Previous fiscal year
(From December 1, 2016
to November 30, 2017)

Current fiscal year
(From December 1, 2017
to November 30, 2018)

Cash flows from operating activities
Profit before income taxes

30,78333,586

Depreciation and amortization

16,794

18,215581

2,983

Losses on impairment of fixed assets
Losses on termination of retirement benefit plans

1,309

—

Amortization of goodwill

407

514

Retirement benefit expenses

1,740

1,885

Equity in losses (earnings) of affiliates

(93)

(130)

Losses (gains) on valuation of investment securities

1445

Increase (decrease) in liabilities for retirement benefits

(706)

(111)

Decrease (increase) in assets for retirement benefits(1,821)

5

51

29

Increase (decrease) in reserves for sales rebates
Increase (decrease) in reserves for directors’ bonuses

(39)

(5)

Increase (decrease) in reserves for bonuses

(53)

181

Increase (decrease) in allowances for doubtful accounts
Interest and dividends income
Interest expenses
Losses (gains) on sales of investment securities

1

225

(584)

(597)

376

341

(1,179)(3,670)Losses (gains) on sales and disposal of fixed assets

988

943

Losses (gains) on transfer of business

—

(670)

Decrease (increase) in notes and accounts receivable –– trade(2,064)

1,293

Decrease (increase) in inventories(1,477)(1,132)

Increase (decrease) in notes and accounts payable –– trade(1,152)(3,415)

Increase (decrease) in accounts payable –– other(1,058)

1,740

Increase (decrease) in accrued consumption taxes

676

(196)

Increase (decrease) in long-term accounts payable

(70)

288

Other

(3,989)(1,657)

Sub-total

39,436

50,692

Interest and dividends income received

622

656

Interest paid

(359)

(340)

Income taxes paid

(12,464)(9,229)Net cash provided by (used in) operating activities

27,234

41,778

68 Financial Information(Millions of yen)Previous fiscal year
(From December 1, 2016
to November 30, 2017)

Current fiscal year
(From December 1, 2017
to November 30, 2018)

Purchases of tangible fixed assets(25,499)(29,217)

Purchases of intangible fixed assets(1,169)(2,089)(82)—

Purchases of investment securities(892)(1,766)

Proceeds from sales of investment securities

1,651

5,159

Net decrease (increase) in short-term loans receivable

(279)

57

Payments of long-term loans receivable

(264)

(430)

Collection of long-term loans receivable

126

46

Payments into time deposits

(219)

(0)

(4,568)—Cash flows from investing activities

Purchase of shares of subsidiaries resulting in change inscope of consolidation

Payments for transfer of business
Proceeds from transfer of business

—

Other
Net cash provided by (used in) investing activities

*2

8,309

(223)

(269)

(31,421)(20,199)

Cash flows from financing activities
Net increase (decrease) in short-term loans payable(1,180)985

Repayment of lease obligations(1,785)(2,131)

Proceeds from long-term loans payable

25,700

3,200

Repayment of long-term loans payable(2,261)(2,248)Cash dividends paid

(5,639)(5,514)

Cash dividends paid to non-controlling interests

(767)

(847)

(10,024)(9,278)Proceeds from issuance of common shares

—

541

Other

(30)

—

4,010

(15,293)

Purchase of treasury stock

Net cash provided by (used in) financing activities
Effects of exchange rate changes on cash and cash equivalents

797

(194)

Increase (decrease) in cash and cash equivalents

621

6,091

Cash and cash equivalents at the beginning of the fiscal year

40,79041,411

Increase in cash and cash equivalents from newly consolidated
subsidiary—

461

Increase in cash and cash equivalents resulting from merger
with unconsolidated subsidiaries—

5

Cash and cash equivalents at the end of the fiscal year*1

41,411*1

47,970Financial Information 69

Notes
Significant Matters Forming the Basis for the Preparation of Consolidated Financial Statements
1. Consolidated subsidiaries
The Company has fifty-eight (58) consolidated subsidiaries. The significant consolidated subsidiaries are
Kewpie Egg Corporation, Deria Foods Co., Ltd., Kewpie Jyozo Co., Ltd., K.R.S. Corporation, Kanae
Foods Co., Ltd., Salad Club, Inc. and Aohata Corporation.
In the current fiscal year, following subsidiaries are newly included in the scope of consolidation:
since Kewpie China Corporation, Guangzhou Kewpie Corporation and Kewpie Philippines, Inc. were
newly incorporated, and the materiality of Hisamatsu Transport Corporation, while it was a nonconsolidated subsidiary until the previous fiscal year, has increased. On the other hand, Kowa Delica
Co., Ltd. is excluded from the scope of consolidation due to the transfer of shares of this company.
Gourmet Delica Co., has conducted an incorporation-type company split whereby Gourmet Delica
Co., Ltd. (the name of the company changed to “Soka Delica Co., Ltd.”) was the split company and a
new company (“(New) Gourmet Delica Co., Ltd.”) was incorporated as the successor company. (New)
Gourmet Delica Co., Ltd. was included in the scope of consolidation. During the current fiscal year, theCompany has sold the 80% shares of (New) Gourmet Delica Co., Ltd. and this company is excluded fromthe scope of consolidation.
As a consequence, five companies were added and two companies were excluded.
Among the nineteen (19) non-consolidated subsidiaries, the principal one is K. LP Corporation. These
companies are excluded from consolidation, because each of the amount of their total assets, net sales,
profit and loss and earned surplus (based on the Company’s ownership percentage) does not have asignificant effect on the consolidated financial statements of the Company.
2. Application of the equity method
An equity method is applied to the investments in three affiliated companies. The principal affiliate
under the equity method is Summit Oil Mill Co., Ltd.
The investments in K. LP Corporation and eighteen (18) other non-consolidated subsidiaries, as well
as AK Franchise System Co., Ltd. and three other affiliated companies are not accounted for on an equity
method, since each of the amounts of profit and loss and earned surplus (based on the Company’sownership percentage) did not have a significant effect on the consolidated financial statements of theCompany.
In the current fiscal year, since the 15% (out of 20%) of the shares of newly-incorporated (New)
Gourmet Delica Co., Ltd. were sold, this company is excluded from the scope of affiliated companies.
3. Fiscal years of consolidated subsidiaries
Among consolidated subsidiaries of the Company, the fiscal year end of nine foreign consolidated
subsidiaries is September 30 and that of six foreign consolidated subsidiaries is December 31.
Six foreign subsidiaries whose fiscal year end is December 31 are consolidated based on theirprovisional financial statements based on a provisional financial statements closing as at September 30.
Other nine foreign subsidiaries are consolidated based on the financial statements as at their fiscal year
end.
However, significant transactions of those subsidiaries recognized during the period after theirprovisional financial closing (September 30) to the fiscal year end of the Company’s consolidated
financial statements (November 30) are reflected in the consolidated financial statements.
4. Accounting policies(1) Basis and method of valuation of significant assets(a) Securities
1. Held-to-maturity bonds are stated at amortized cost (by the straight-line method).
2. Shares in subsidiaries and affiliated companies not subject to the equity method are stated at cost,
determined by the moving average method.

70 Financial Information

3. Other securities with market value are stated at market value, determined by market prices, etc.
as of the end of the fiscal year (Changes in unrealized gains and losses are recorded in net assets.
Costs of securities to be sold are determined by the moving average method.). Those withoutmarket value are stated at cost, determined by the moving average method.
(b) Derivatives
Stated at fair value.
Hedge accounting is applied to hedge transactions that meet the requirements thereof.
(c) Inventories
Purchased goods and products, work in process, raw materials and supplies are principallystated at monthly moving average cost (the method to write off a book value to reflect a
decreased profitability).
(2) Depreciation and amortization of significant depreciable and amortizable assets(a) Tangible fixed assets (excluding lease assets)
Tangible fixed assets are depreciated by the straight-line method.
The main useful lives are as follows.
Buildings and structures:
2–50 years
Machinery, equipment and vehicles: 2–10 years(b) Intangible fixed assets (excluding lease assets)
Intangible fixed assets are amortized by the straight-line method.
The main useful life is as follows.
Software:5 years(c) Lease assets
Lease assets in finance lease transactions other than those which are deemed to transfer theownership of lease assets to lessees are calculated by the straight-line method by considering thelease period to be useful life and the residual value to be zero.
(3) Method of treatment of significant deferred assets
Business commencement expenses are recorded as expenses in full at the time of payment.
(4) Accounting standards for significant allowances(a) Allowances for doubtful accounts
To provide for losses on bad debts, the Group sets aside an estimated uncollectable amount, by
taking into consideration the possible credit loss rate in the future based on the actual loss rate
in respect of general credits, and the particular possibilities of collection in respect of possible
non-performing credits and other specific claims.
(b) Reserves for sales rebates
To provide for payments for sales rebates to be borne during the current fiscal year, reserves forsales rebates are provided based on an accrual basis in accordance with each company’s policy(rate of the estimated payments for sales rebates to sales).
(c) Reserves for bonuses
To provide for the payment of bonuses to employees, reserves for bonuses are provided
according to the expected amount of the payment which attributes to the current fiscal year.
(d) Reserves for directors’ bonuses
To provide for the payment of bonuses to directors, reserves for directors’ bonuses are provided
according to the estimated amounts payable at the end of the current fiscal year.
(5) Accounting for retirement benefits(a) Periodic allocation method for projected retirement benefits
In calculating retirement benefit obligations, the method of allocating the projected retirement
benefits to the period up to the end of the current fiscal year is the benefit formula basis.

Financial Information 71(b) Method of accounting for actuarial gains or losses and prior service costs
Prior service costs are amortized by the straight-line method principally over twelve (12) years
based on the average remaining employees’ service years at the time of accrual.
Actuarial gains or losses are amortized by the straight-line method principally over twelve(12) years based on the average remaining employees’ service years at each fiscal year, and theiramortizations start from the next fiscal year of the respective accrual years.
In addition, if the amount of pension plan assets exceeds that of retirement benefit obligations
for pension plan, it is recorded as assets for retirement benefits on the consolidated balance sheet.
(6) Significant methods of hedge accounting(a) Hedge accounting
Deferral hedge is adopted in hedge accounting.
Allocation method is adopted for transactions that meet the requirements for that method.
Special treatment is adopted for interest rate swap transactions that meet the requirements
for special treatment.
(b) Hedging instruments
Hedging instruments are forward exchange contracts, interest rate swap transactions andcommodity futures transactions.
(c) Hedged items
Hedged items are purchase transactions in foreign currencies, purchase transactions, equity
investments in overseas subsidiaries and interest of loans.
(d) Hedging policy
The Group enters into forward exchange contracts to hedge risks from fluctuations in foreignexchange rates, and interest rate swap transactions to hedge risks from fluctuations in interest
rates in the future.
The Group conducts commodity futures transactions to hedge market fluctuation risk relating
to grain market prices.
In addition, the Group never makes use of them for the purpose of speculative transactions.
(e) Assessment of the effectiveness of hedge accounting
Control procedures of hedge transactions are executed according to each company’s internal
rules. The effectiveness of the hedge is analyzed by comparing movements in the fair value ofhedged items with those of hedging instruments, assessed and strictly controlled.
However, the assessment of the effectiveness of interest rate swap transactions that conformto the special treatment is omitted.
(7) Method and period for amortization of goodwill
Goodwill is amortized on a straight-line basis over its estimated useful life during which its effectwill be realized. However, goodwill is expensed as incurred if immaterial.
(8) Scope of cash in the consolidated statements of cash flows
Cash in the consolidated statements of cash flows (cash and cash equivalents) consists of cash in
hand, bank deposits which can be withdrawn freely, and short-term investments which can be easily
converted into cash and matures within three months from the acquisition date on which they are atlittle risk of changes in value.
(9) Other important matters forming the basis of preparation of consolidated financial statements
Consumption taxes are recorded on a net-of-tax basis.

72 Financial Information(Accounting Standards Not Yet Adopted)
“Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, issued by the AccountingStandards Board of Japan on March 30, 2018)“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No.
30, issued by the Accounting Standards Board of Japan on March 30, 2018)(1) Summary
The International Accounting Standards Board (IASB) and US Financial Accounting Standards Board(FASB) jointly developed comprehensive revenue recognition standards and issued “Revenue fromContracts with Customers” in May 2014 (IASB’s IFRS 15 and FASB’s Topic 606). Considering that IFRS
15 shall apply to fiscal years beginning on or after January 1, 2018, and Topic 606 shall apply to fiscal
years beginning after December 15, 2017, the ASBJ developed a comprehensive accounting standard onrevenue recognition and thus issued the accounting standard together with the implementation
guidance.
The ASBJ established the accounting standard on revenue recognition by following the basic policies
in developing it. The basic policies were: firstly, incorporating the core principle of IFRS 15 as the starting
point from the perspective of facilitating comparability among financial statements, which is one of thebenefits of ensuring consistency with IFRS 15; secondly, adding alternative treatments, but to the extent
not impairing comparability, where consideration should be given to the practice having been used inJapan.
(2) Timing of adoption
The Group will adopt these ASBJ statement and guidance from the beginning of the fiscal year ending
November 30, 2022.
(3) Effect of adoption of accounting standards
The effect of adoption of the Accounting Standard for Revenue Recognition and its guidance on the
consolidated financial statements is currently under evaluation.

Financial Information 73

Consolidated Balance Sheets*1 Investments in unconsolidated subsidiaries and affiliated companies are as follows:
Previous fiscal year
(As of November 30, 2017)

Current fiscal year
(As of November 30, 2018)

Investment securities (stocks)¥

3,456 million¥

2,719 million

Other (Investments in capital)¥

786 million¥

786 million*2 Pledged assets and secured obligations
Pledged assets are as follows:
Previous fiscal year
(As of November 30, 2017)

Current fiscal year
(As of November 30, 2018)

Buildings and structures¥

82 million¥

67 million

Land

¥

1,064 million¥

1,064 million¥

1,146 million¥

1,132 million

Total

Secured obligations are as follows:

Short-term loans payable
Long-term loans payable
Total

Previous fiscal year
(As of November 30, 2017)

Current fiscal year
(As of November 30, 2018)¥

789 million¥¥

583 million¥

336 million¥

1,372 million¥

1,162 million

825 million*3 Contingent liabilities
Liabilities, such as loans from financial institutions, that the Group guarantees under joint signature forcompanies and employees are as follows:
Guarantee obligations
Previous fiscal year
(As of November 30, 2017)

Current fiscal year
(As of November 30, 2018)

Employees (loan)¥

306 million¥

249 million

AK Franchise System Co., Ltd. (loan)¥

40 million¥

30 million

Kewpie-Egg World Trading Europe B.V.
(Guarantee for payment of purchases)

¥

––

¥

14 million

Shanghai KRS Logistics Corporation(Guarantee for debtor’s contract fulfillment)¥

35 million

¥

––

¥

382 million¥

294 million

Total(Note)As the liabilities for AK Franchise System Co., Ltd. are serving as re-guarantees, the amount presented is the amount re-guaranteed by the Group.

*4 Amount of reduction entry
Accumulated reduction entry of tangible fixed assets deducted from acquisition cost of tangible fixed
assets using funds from government subsidy, etc. is as follows:
Previous fiscal year
(As of November 30, 2017)

Current fiscal year
(As of November 30, 2018)

Buildings and structures¥

572 million¥

572 million

Machinery, equipment and vehicles¥

652 million¥

652 million

Land

¥

117 million¥

117 million¥

383 million¥

383 million¥

1,726 million¥

1,726 million

Other
Total

74 Financial Information

Consolidated Statements of Income*1

The inventory balance at the end of the fiscal year is presented after book values were written down when
their carrying amounts become unrecoverable and the following losses on valuation of inventories areincluded in cost of sales.
Previous fiscal year
(From December 1, 2016 to November 30, 2017)¥*2

Current fiscal year
(From December 1, 2017 to November 30, 2018)

437 million¥

198 million

Main components of selling, general and administrative expenses are as follows:
Previous fiscal year
(From December 1, 2016
to November 30, 2017)

Current fiscal year
(From December 1, 2017
to November 30, 2018)

Transportation and warehousing expenses¥ 25,808 million¥ 26,833 million

Sales promotion expenses¥ 3,948 million¥ 3,930 million

Research and development expenses¥ 4,058 million¥ 4,142 million

Advertising expenses¥ 9,469 million¥ 9,142 million

Payroll expenses¥ 21,980 million¥ 22,820 million

Depreciation expenses¥ 2,766 million¥ 2,913 million

Provision of reserves for bonuses¥¥

Retirement benefit expenses¥ 1,846 million¥ 1,874 million

Provision of allowances for doubtful accounts

¥

¥

*3

467 million(37) million

573 million
53 million

Total amount of research and development expenses included in general and administrative expenses
Previous fiscal year
(From December 1, 2016 to November 30, 2017)

Current fiscal year
(From December 1, 2017 to November 30, 2018)¥ 4,058 million*4¥4,142 million

Gains on transfer of business:
Previous fiscal year (From December 1, 2016 to November 30, 2017)
Not applicable.
Current fiscal year (From December 1, 2017 to November 30, 2018)
This is principally due to the transfer of the business for convenience stores of Gourmet Delica Co.,
Ltd., which was a consolidated subsidiary of the Company.

*5

Gains on sales of fixed assets consists of the following:
Previous fiscal year
(From December 1, 2016
to November 30, 2017)

Current fiscal year
(From December 1, 2017
to November 30, 2018)¥

84 million¥

68 million––¥

51 million

Buildings and structures¥

2 million¥

17 million

Other

¥

0 million¥

0 million¥

87 million¥

137 million

Machinery, equipment and vehicles
Land

Total

Financial Information 75*6 Losses on impairment of fixed assets
The Group recognized losses on impairment of fixed assets for the following group of assets.
Previous fiscal year (From December 1, 2016 to November 30, 2017)
Location
Morimachi,
Shuchi-gun,Shizuoka
Itami-shi, Hyogo

Losses on impairmentof fixed assets(millions of yen)

Use

Item

Factory

Buildings, etc.

358

Factory
Total

Buildings, etc.

222
581

In principle, the Group classified the fixed assets into groups depending on the type of respective
operation and business place based on the management accounting units on which revenue andexpenditure are continuously monitored.
During the current fiscal year, the Company decided to demolish the factory located in Morimachi,
Shuchi-gun, Shizuoka. Also, the Company decided to reorganize the production locations of the factory
located in Itami-shi, Hyogo.
As a result, the Company has written down book values to recoverable amounts with respect tobuildings, etc. of the factory located in Morimachi, Shuchi-gun, Shizuoka, and buildings, etc. of thefactory located in Itami-shi, Hyogo. The relevant write-down amount of ¥581 million is recorded as
losses on impairment of fixed assets.
The recoverable amounts are measured by their net sales value based on the estimated sales value.
Current fiscal year (From December 1, 2017 to November 30, 2018)
Location

Use

Item

PolandKasugai-shi, Aichi
Oishida-machi
Kitamurayama-gun,
Yamagata––
Factory

Goodwill, etc.
Buildings, etc.

Production lines

Machinery,equipment, etc.

Total

Losses on impairmentof fixed assets(millions of yen)
2,623
219
141
2,983

In principle, the Group classified the fixed assets into groups depending on the type of respective
operation and business place based on the management accounting units on which revenue andexpenditure are continuously monitored.
During the current fiscal year,
the Company wrote down the goodwill and other intangible assets relating to Poland to recoverable
amounts, because it no longer expects to generate earnings as initially anticipated. As such, the relevant
write-down amount of ¥2,623 million is recorded as losses on impairment of fixed assets. The
recoverable amounts are measured according to value in use, and are calculated by discounting thefuture cash flows using a rate of 6.10%.
The Company wrote down the book values of a factory in Kasugai-shi, Aichi, to recoverable amounts
as a result of the decision to close the factory. As such, the relevant write-down amount of ¥219 million
is recorded as losses on impairment of fixed assets. The recoverable amounts are measured by their net
sales value based on the estimated sales value.
The Company wrote down the book values of production lines in Oishida-machi, Kitamurayamagun, Yamagata to recoverable amounts, because it no longer expects to recover its investment due todiminished profitability. As such, the relevant write-down amount of ¥141 million is recorded as losses
on impairment of fixed assets. The recoverable amounts are measured according to value in use, andare calculated by discounting the future cash flows using a rate of 0.59%.

76 Financial Information*7 Losses on disposal of fixed assets consists of the following:
Previous fiscal year
(From December 1, 2016
to November 30, 2017)

Current fiscal year
(From December 1, 2017
to November 30, 2018)

Machinery, equipment and vehicles¥

723 million¥

731 million

Buildings and structures¥

254 million¥

240 million

Other

¥

84 million¥

43 million¥

1,062 million¥

1,016 million

Total*8 Losses on termination of retirement benefit plans
Previous fiscal year (From December 1, 2016 to November 30, 2017)
This is a result of the consolidated subsidiary HENNINGSEN FOODS, INC. having terminated its
defined benefit pension plan.
Current fiscal year (From December 1, 2017 to November 30, 2018)
Not applicable.

Consolidated Statements of Comprehensive Income* Reclassification adjustments and income tax effects related to other comprehensive income
Previous fiscal year
(From December 1, 2016
to November 30, 2017)
Unrealized holding gains (losses) on securities:
Amount arising during the fiscal year
Reclassification adjustments
Before income tax effects
Amount of income tax effects
Unrealized holding gains (losses) on securities
Unrealized gains (losses) on hedges:
Amount arising during the fiscal year
Reclassification adjustments
Before income tax effects
Amount of income tax effects
Unrealized gains (losses) on hedges
Foreign currency translation adjustments:
Amount arising during the fiscal year
Reclassification adjustments
Foreign currency translation adjustments
Adjustments for retirement benefits:
Amount arising during the fiscal year
Reclassification adjustments
Before income tax effects
Amount of income tax effects
Adjustments for retirement benefits
Total other comprehensive income

Current fiscal year
(From December 1, 2017
to November 30, 2018)

¥
¥
¥
¥
¥

6,727 million(106) million
6,620 million(2,029) million
4,591 million

¥
¥
¥
¥
¥

(508) million(3,655) million(4,164) million
1,260 million(2,903) million¥(177) million
26 million(150) million
47 million(102) million¥(46) million
18 million(27) million
4 million(22) million

3,383 million––
3,383 million¥¥(391) million––(391) million¥ 3,507 million¥ 3,049 million¥ 6,556 million¥ (2,091) million¥ 4,465 million¥ 12,337 million

¥
¥
¥
¥
¥
¥

(2,985) million
1,885 million(1,099) million
340 million(758) million(4,076) million

¥
¥
¥
¥
¥

¥
¥
¥

Financial Information 77

Consolidated Statements of Changes in Net Assets
Previous fiscal year (From December 1, 2016 to November 30, 2017)
1. Total numbers and periodic changes of issued shares and treasury stock by class
Number of shares at the
beginning of the current
fiscal year
Issued shares
Common stock (Note 1)
Total
Treasury stock
Common stock (Notes 2 & 3)
Total

Increase in number ofsharesDecrease in number ofsharesNumber of shares at theend of the current fiscal
year

153,000,000
153,000,000––––

3,000,000
3,000,000

150,000,000
150,000,000

3,333,991
3,333,991

4,121,530
4,121,530

4,500,000
4,500,000

2,955,521
2,955,521(Notes) 1. The decrease of 3,000,000 shares in the number of issued shares is the result of the retirement of treasury stock pursuant to the resolution of
the Board of Directors.
2. The increase of 4,121,530 shares in the number of shares of treasury stock includes an increase of 4,120,000 shares due to the purchase oftreasury stock pursuant to the resolution of the Board of Directors, and an increase of 1,530 shares due to the acquisition of shares less than
one unit.
3. The decrease of 4,500,000 shares in the number of shares of treasury stock includes a decrease of 3,000,000 shares due to the retirement oftreasury stock pursuant to the resolution adopted at the Board of Directors’ meeting, and a decrease of 1,500,000 shares due to their
allocation to a third party for the purpose of funding the activities of the Kewpie Mirai Tamago Foundation, a general incorporated
foundation.

2. Dividend(1) Dividends paid in the current fiscal year
(Resolution)
The Board of
Directors’ meeting
held on January 25,
2017
The Board of
Directors’ meeting
held on June 26, 2017

Type of share

Total amounts ofdividends(millions of yen)

Common stock

2,918

Common stock

2,720

Dividends per share(yen)

Record date

Effective date

19.50

November 30, 2016

February 3, 201718.00

May 31, 2017

August 7, 2017

(2) Dividends with record date during the current fiscal year but to be effective in the following fiscal
year(Resolution)
The Board of
Directors’ meeting
held on January 23,
2018Type of share

Common stock

Total amounts ofdividends
Dividend resource(millions of yen)
2,720

Earned surplus

Dividends per
share
(yen)

Record date

Effective date

18.50

November 30,
2017

February 6, 2018

78 Financial Information

Current fiscal year (From December 1, 2017 to November 30, 2018)
1. Total numbers and periodic changes of issued shares and treasury stock by class
Number of shares at the
beginning of the current
fiscal year
Issued shares
Common stock
Total
Treasury stock
Common stock (Note)
Total(Note)

Increase in number ofsharesDecrease in number ofsharesNumber of shares at theend of the current fiscal
year

150,000,000
150,000,000

––
––

––
––

150,000,000
150,000,000

2,955,521
2,955,521

4,001,404
4,001,404––––

6,956,925
6,956,925

The increase of 4,001,404 shares in the number of shares of treasury stock includes 4,000,000 shares due to the acquisition of treasury stock
pursuant to the resolution of the Board of Directors’ meeting, and also includes 1,404 shares due to the acquisition of shares less than one unit.

2. Dividend(1) Dividends paid in the current fiscal year
(Resolution)
The Board of
Directors’ meeting
held on January 23,
2018
The Board of
Directors’ meeting
held on June 25, 2018

Type of share

Total amounts ofdividends(millions of yen)

Common stock

2,720

Common stock

2,793

Dividends per share(yen)

Record date

Effective date

18.50

November 30, 2017

February 6, 201819.00

May 31, 2018

August 6, 2018

(2) Dividends with record date during the current fiscal year but to be effective in the following fiscal
year(Resolution)
The Board of
Directors’ meeting
held on January 23,
2019Type of share

Common stock

Total amounts ofdividends
Dividend resource(millions of yen)
2,717

Earned surplus

Dividends per
share
(yen)

Record date

Effective date

19.00

November 30,
2018

February 7, 2019

Financial Information 79

Consolidated Statements of Cash Flows*1 Reconciliation between “Cash and cash equivalents at the end of the fiscal year” and “Cash anddeposits” on the consolidated balance sheets
Previous fiscal year
(From December 1, 2016
to November 30, 2017)

Current fiscal year
(From December 1, 2017
to November 30, 2018)

Cash and deposits¥ 29,618 million¥ 38,493 million

Time deposits with maturity over three months¥(207) million¥(23) million

Securities¥ 12,000 million¥

9,500 million

Cash and cash equivalents at the end of the fiscal year

¥ 41,411 million¥ 47,970 million*2

Primary components of assets and liabilities decreased as a result of transfer of business
The primary components of decreases in assets and liabilities as a result of transfer of business andthe relationship with the transfer price of the business and the proceeds from transfer of business inthe current fiscal year are as follows:
Current assets
Fixed assets
Current liabilities
Non-current liabilities
Proceeds from sales of shares
Increase by company split
Transfer price of shares
Collection of loans receivable
Cash and cash equivalents
Net: Proceeds from transfer of business¥ 3,752 million¥ 7,434 million¥ (10,753) million¥(484) million¥
240 million¥
49 million¥
240 million¥ 9,800 million¥ (3,100) million¥ 6,940 million

80 Financial Information

Lease Transactions
1. Finance lease transactions (Lessee)
Finance lease transactions that do not transfer ownership(a) Details of lease assets
Lease assets mainly consist of production lines in the Foods business and information equipment
and cars in the Distribution system business.
(b) Depreciation method for lease assets
Depreciation method for lease assets was stated in “4. Accounting policies (2) Depreciation andamortization of significant depreciable and amortizable assets” under Significant Matters Forming
the Basis for the Preparation of Consolidated Financial Statements.
2. Operating lease transactions
Future lease payments related to non-cancellable operating lease transactions(Millions of yen)

Due within one year
Due over one year
Total

Previous fiscal year
(As of November 30, 2017)

Current fiscal year
(As of November 30, 2018)

1,690
8,576
10,267

1,813
8,485
10,298Financial Information 81

Financial Instruments
1. Matters relating to the status of financial instruments(1) Policy in relation to financial instruments
The Group raises required funds through bank loans and bond issues according to its equipment
investment plan. Floating money is invested in highly secure financial assets and short-term
operating funds are provided by bank loans. The Group uses derivatives to hedge risks, as described
below, and has a policy not to conduct speculative trading.
(2) Details of financial instruments and related risks
Notes and accounts receivable –– trade, which are receivables, are exposed to credit risks of customers.
Securities and investment securities, which mainly consist of stocks of companies with which theGroup has business or other relationships, are exposed to market fluctuation risk.
Substantially all of notes and accounts payable –– trade, which are payables, have payment due
dates within one year. Some payables in relation to import of raw materials are denominated inforeign currencies and exposed to foreign currency risk, which is hedged by using forward exchange
contracts when necessary. Short-term loans payable are funds raised principally in relation tobusiness transactions and long-term loans payable and bonds are funds raised principally for capital
expenditures. Certain loans payable bear variable interest rates and are exposed to interest volatility
risk, which is hedged by using interest rate swap transaction.
Derivative transactions include a forward exchange contracts to hedge foreign currency risk
involving payables in foreign currencies, interest rate swap transactions to hedge interest volatility
risk relating to loans payable, oil swaps to hedge market risk relating to prices of light oil and heavy
oil, and commodity futures to hedge market fluctuation risk relating to grain market prices. With
regard to hedging instruments, hedged items, hedge policies, the method of assessment of theeffectiveness of hedges etc., please refer to the above “Notes on the Matters Forming the Basis ofPreparation of Consolidated Financial Statements: 4. Accounting policies: (6) Significant methods ofhedge accounting.”(3) Risk management system relating to financial instruments(i) Management of credit risk
The Company, through its operation management division and accounting and financing
division, periodically monitors the conditions of its major customers and manages the due dates
and outstanding balances to early detect or reduce credits that may become uncollectable due tothe deterioration of its financial conditions or other reasons. Likewise, its consolidated
subsidiaries manage their receivables.
With regard to derivatives, the Company perceives very little credit risk as it enters intotransactions solely with financial institutions with high ratings.
(ii) Management of market risk
The Group uses forward exchange contracts to hedge foreign currency risk involving payables
in foreign currencies, interest rate swap transactions to hedge interest volatility risk relating toloans payable, oil swaps to hedge market risk relating to prices of light oil and heavy oil, andcommodity futures to hedge market fluctuation risk relating to grain market prices. The
Company’s risk management relating to such derivatives is conducted by its Division of
Production and Financial Department pursuant to its internal rules and all of the trading results
are reported to the General Manager of the Financial Department. With regard to its
consolidated subsidiaries, such risk management is conducted principally by their respective
administration divisions and all of the trading results are reported to the respective directors of
the subsidiaries responsible therefor.
With regard to securities and investment securities, the Group periodically obtains

82 Financial Information

information on the market values and financial conditions of the issuers (customer companies)
and reviews the holding of securities other than held to maturity on a continuous basis by taking
into consideration the market conditions and the relationships with the client companies.
(iii) Management of liquidity risk relating to financing
The Group manages liquidity risk by preparing and updating cash flow projections on a timely
basis, by arranging overdraft facilities with several financial institutions, and by maintaining
certain levels of liquidity through a cash management system.
(4) Supplementary explanation of matters relating to the fair values of financial instruments, etc.
The fair values of financial instruments include market prices and reasonably estimated values if
there are no market prices. As the estimation of fair values incorporates variable factors, adopting
different assumptions may change the values. In addition, the contract amount of financial derivativetransactions in itself, described in Notes on Financial Derivative Transactions, should not be
considered indicative of the market risks associated with the financial derivative transactions.
2. Matters concerning fair values, etc. of financial instruments
The following table shows amounts for items recorded in the consolidated balance sheet along with
their fair values and the variances. Items for which determining the fair values is considered as being
extremely difficult are not included in the table. (See Note 2)

Financial Information 83

Previous fiscal year (As of November 30, 2017)
Book value on the
consolidated balance
sheet(millions of yen)
(1) Cash and deposits

29,618(2) Notes and accounts receivable –– trade78,212

Allowances for doubtful accounts (*1)(215)

Fair value

Variance(millions of yen)(millions of yen)

29,618––77,997

77,997––(3) Securities and investment securities

40,62840,628––

Total assets

148,244

148,244––(4) Notes and accounts payable –– trade

48,00848,008––(5) Short-term loans payable

5,883

5,883

––

(6) Current portion of bonds

––

––

––

(7) Accounts payable –– other17,547

17,547––(8) Accrued income taxes

4,005

4,005

––

(9) Bonds

10,00010,08585(10) Long-term loans payable (*2)

38,101

38,13937

Total liabilities

123,546

123,669

123

Derivatives (*3)

(41)

(41)

––

(*1)
(*2)
(*3)

Allowances for doubtful accounts of notes and accounts receivable –– trade are excluded from the notes and accounts receivable –– trade.
Long-term loans payable includes the current portion of long-term loans payable that are included in short-term loans payable.
Net receivables and payables resulting from derivatives are presented in net amounts.

84 Financial Information

Current fiscal year (As of November 30, 2018)
Book value on the
consolidated balance
sheet(millions of yen)
(1) Cash and deposits

38,493(2) Notes and accounts receivable –– trade

77,034

Allowances for doubtful accounts (*1)(431)

Fair value

Variance(millions of yen)(millions of yen)

38,493––76,60276,602––(3) Securities and investment securities

34,01634,016––

Total assets

149,113

149,113––(4) Notes and accounts payable –– trade44,51844,518––(5) Short-term loans payable

7,108

7,108

––

(6) Current portion of bonds

10,00010,000––(7) Accounts payable –– other

17,02517,025––(8) Accrued income taxes

6,775

6,775

––

––

––

––

(10) Long-term loans payable (*2)

39,051

39,08028

Total liabilities

124,479

124,50828

Derivatives (*3)

(1)

(1)

––

(9) Bonds

(*1)
(*2)
(*3)

Allowances for doubtful accounts of notes and accounts receivable –– trade are excluded from the notes and accounts receivable –– trade.
Long-term loans payable includes the current portion of long-term loans payable that are included in short-term loans payable.
Net receivables and payables resulting from derivatives are presented in net amounts.

Financial Information 85(Notes) 1. Matters concerning the calculation method of the fair values of financial instruments, as well as
securities and derivatives
Assets(1) Cash and deposits and (2) Notes and accounts receivable –– trade
The book value is used for these items, as the fair value is nearly equal to the book value as a resultof their short settlement periods.
(3) Securities and investment securities
The fair value of stocks is determined by the price thereof traded on an exchange. For bonds, thevalue is determined by the price on an exchange or the price announced by the counterparty
financial institutions. For money in trust or otherwise, the book value is used, as the fair value isnearly equal to the book value as a result of its short settlement periods. Please refer to Notes on
Securities for matters concerning securities by purpose of holding.
Liabilities(4) Notes and accounts payable –– trade, (5) Short-term loans payable, (7) Accounts payable –– other,and (8) Accrued income taxes
The book value is used for these items, as the fair value is nearly equal to the book value as a resultof their short settlement periods.
(6) Current portion of bonds
The fair value of current portion of bonds with fixed interest rates is measured as the present valueof the total principal and interest discounted at a rate that would be applied for a new similar
issuance. However, the book value is used for this item, as the fair value is nearly equal to thebook value.
(9) Bonds
The fair value of bonds with fixed interest rates is measured as the present value of the total
principal and interest discounted at a rate that would be applied for a new similar issuance.
(10) Long-term loans payable
The fair value of long-term loans payable with fixed interest rates is measured as the present valueof the total principal and interest discounted at a rate that would be applied for a new similarborrowings. For long-term loans payable with floating interest rates, the book value is used, as thefair value is nearly equal to the book value as a result of the revision of interest rates based on themarket interest rates in short periods. Out of long-term loans payable with variable interest rates,
fair values of those subject to special treatment for interest rate swap transactions are measured
based on the present value of the total amount of principal and interest, which was accounted foras an integral part of the relevant interest rate swap transactions and discounted by the reasonably
estimated interest rate that would be applied for new similar borrowing.

86 Financial Information

Derivatives
Fair values with respect to derivative transactions are calculated based on prices indicated bycounterparty financial institutions and other such entities. Interest rate swap transactions to which
special treatment is applied are accounted for as an integral part of long-term loans payable, a hedged
item. Thus, their fair values are included in the fair value of long-term loans payable. For details offinancial derivative transactions, please refer to Notes on Financial Derivative Transactions.
2. Financial instruments for which determining the market values is recognized as being extremely
difficult(Millions of yen)

Category

Previous fiscal year
(As of November 30, 2017)

Current fiscal year
(As of November 30, 2018)

5,867

5,156

Unlisted stocks

The item has no market price and, at the same time, it is considered estimating their future cash flows
will require excessive costs. Therefore, as determining the market value is recognized as being
extremely difficult, it is not included in “(3) Securities and investment securities.”
3. Expected redemption amount of monetary receivables and securities with maturity dates reachingafter the fiscal year end of the Company’s consolidated financial statements
Previous fiscal year (As of November 30, 2017)

Cash and deposits
Notes and accounts receivable –– trade
Securities and investment securities
Other securities with maturity
Others
Total

Within one year

Over one year
to five years

Over five years
to 10 years

Over 10 years(millions of yen)(millions of yen)(millions of yen)(millions of yen)

29,58578,212

––
––

––
––

––
––

12,000––––––119,797

––

––

––

Within one year

Over one year
to five years

Over five years
to 10 years

Over 10 years(millions of yen)(millions of yen)(millions of yen)(millions of yen)

38,45977,034

––
––

––
––

––
––

Current fiscal year (As of November 30, 2018)

Cash and deposits
Notes and accounts receivable –– trade
Securities and investment securities
Other securities with maturity
Others
Total

9,500

––

––

––

124,994

––

––

––

Financial Information 87

4. Scheduled repayment amounts for bonds, long-term loans payable and other interest-bearing debt
after the fiscal year end of the Company’s consolidated financial statements
Previous fiscal year (As of November 30, 2017)

Short-term loans
payableBonds

Within one year

Over one year
to two years

Over two years
to three years

Over three years
to four years

Over four years
to five years

Over five years(millions of yen)(millions of yen)(millions of yen)(millions of yen)(millions of yen)(millions of yen)

5,883

––

––

––

––

––

––

10,000

––

––

––

––

Long-term loans
payable

2,153

2,037

2,021

2,195

11,066

18,626

Total

8,037

12,037

2,021

2,195

11,066

18,626

Current fiscal year (As of November 30, 2018)
Within one year

Over one year
to two years

Over two years
to three years

Over three years
to four years

Over four years
to five years

Over five years(millions of yen)(millions of yen)(millions of yen)(millions of yen)(millions of yen)(millions of yen)

Short-term loans
payable

7,108

––

––

––

––

––

Bonds

10,000

––

––

––

––

––

Long-term loans
payable

2,387

2,371

2,545

11,395

1,736

18,615

Total

19,496

2,371

2,545

11,395

1,736

18,615

88 Financial Information

Securities
1. Other securities
Previous fiscal year (As of November 30, 2017)
Description

Balance sheet
amount(millions of yen)

(1) Stocks
Securities whoseBook value on the
consolidated balance
sheet exceeds
their acquisition cost

28,532(millions of yen)

8,584

19,948(a) Government and local bonds

––

––

––

(b) Corporate bonds

––

––

––

(c) Other(3) Other
Sub-total

––

––

––

––

––

––

28,532

8,584

19,948

96

105

(8)

(2) Bonds(a) Government and local bonds

––

––

––

(b) Corporate bonds

––

––

––

(c) Other(3) Other
Sub-total
Total(Note)

Variance(millions of yen)

(2) Bonds(1) Stocks
Securities whose
acquisition cost exceeds
their Book value on the
consolidated balance
sheet

Acquisition cost

––

––

––

12,00012,000––12,096

12,105(8)

40,62820,68919,939With regard to the Company’s shareholdings of unlisted stocks (¥2,260 million reported on the consolidated balance sheet), as these stocks do
not have market prices and it is considered extremely difficult to determine their fair values, these stocks are not included in “Other securities”
in the above table.

Current fiscal year (As of November 30, 2018)
Description

Balance sheet
amount(millions of yen)

(1) Stocks
Securities whosebalance sheet amountexceeds
their acquisition cost

23,122(millions of yen)

7,137

15,985(a) Government and local bonds

––

––

––

(b) Corporate bonds

––

––

––

(c) Other(3) Other
Sub-total

––

––

––

––

––

––

23,122

7,137

15,985

1,394

1,607

(213)

(2) Bonds(a) Government and local bonds

––

––

––

(b) Corporate bonds

––

––

––

(c) Other(3) Other
Sub-total
Total(Note)

Variance(millions of yen)

(2) Bonds(1) Stocks
Securities whose
acquisition cost exceeds
their balance sheet
amountAcquisition cost

––

––

––

9,500

9,500

––

10,894

11,107(213)

34,016

18,244

15,771

With regard to the Company’s shareholdings of unlisted stocks (¥2,437 million reported on the consolidated balance sheet), as these stocks do
not have market prices and it is considered extremely difficult to determine their fair values, these stocks are not included in “Other securities”
in the above table.

Financial Information 89

2. Other securities sold during the fiscal year
Previous fiscal year (From December 1, 2016 to November 30, 2017)
Description

Aggregate
sales amount(millions of yen)

(1) Stocks

1,572

Gains

Losses(millions of yen)(millions of yen)

1,179

0

(2) Bonds(a) Government and local bonds

––

––

––

(b) Corporate bonds

––

––

––

(c) Other(3) Other
Total

––

––

––

––

––

––

1,572

1,179

0

Current fiscal year (From December 1, 2017 to November 30, 2018)
Description

Aggregate
sales amount(millions of yen)

(1) Stocks

Gains

Losses(millions of yen)(millions of yen)

5,112

3,670

––

(a) Government and local bonds

––

––

––

(b) Corporate bonds

––

––

––

(2) Bonds(c) Other(3) Other
Total

––

––

––

––

––

––

5,112

3,670

––

3. Securities for which impairment losses are recognizedPrevious fiscal year (From December 1, 2016 to November 30, 2017)
Impairment losses of ¥14 million were recognized for securities (¥14 million on shares without
readily determinable market value).
In the recognition of impairment losses, total impairment is recognized when the fair value at theend of the fiscal year has fallen below 50% of the acquisition cost. When the fair value has fallen
between 30% and 50%, an impairment of the amount deemed necessary by taking into accountrecoverability etc. is recognized.
Current fiscal year (From December 1, 2017 to November 30, 2018)
Impairment losses of ¥45 million were recognized for securities (¥45 million on shares without
readily determinable market value).
In the recognition of impairment losses, total impairment is recognized when the fair value at theend of the fiscal year has fallen below 50% of the acquisition cost. When the fair value has fallen
between 30% and 50%, an impairment of the amount deemed necessary by taking into accountrecoverability etc. is recognized.

90 Financial Information

Financial Derivative Transactions
1. Financial derivative transactions to which the hedge accounting is not adopted
Commodity derivatives
Previous fiscal year (As of November 30, 2017)
Contract amountClassification

Item

Transaction type

Total

Over one year

(millions of yen) (millions of yen)Transactions
other thanmarkettransactions(Note)

Oil

Swap transactions
Floating receipt
Fixed payment

180

Fair value(millions of yen)

129

(29)

Gains or losses
on valuation(millions of yen)

(29)

Calculation of fair values
Fair values are calculated using the prices offered by transacting financial institutions etc.

Current fiscal year (As of November 30, 2018)
Contract amountClassification

Item

Transaction type

Total

Over one year

(millions of yen) (millions of yen)Transactions
other thanmarkettransactions(Note)

Oil

Swap transactions
Floating receipt
Fixed payment

129

Fair value(millions of yen)

77

(20)

Gains or losses
on valuation(millions of yen)

(20)

Calculation of fair values
Fair values are calculated using the prices offered by transacting financial institutions etc.

2. Financial derivative transactions to which the hedge accounting is adopted(1) Currency derivatives
Previous fiscal year (As of November 30, 2017)
Hedge accounting
methodTransaction type

Principle hedged
item

Allocation method Purchased forward
exchange contracts– Accounts payablefor forward
U.S. dollar
exchange contracts,
trade
etc.
Euro
(Note)

Contract amount
Total

Over one year

(millions of yen)(millions of yen)

680
58
738

––
––
––

Fair value(millions of yen)

607Calculation of fair values
Fair values are calculated using the prices offered by transacting financial institutions etc.

Current fiscal year (As of November 30, 2018)
Hedge accounting
methodTransaction type

Principle hedged
item

Allocation method
Purchased forward
for forward
Accounts payableexchange contracts–
exchange contracts,
trade
U.S. dollar
etc.
Euro
(Note)

Contract amount
Total

Over one year

(millions of yen)(millions of yen)

439
46
486

Calculation of fair values
Fair values are calculated using the prices offered by transacting financial institutions etc.

––
––
––

Fair value(millions of yen)

12
0
12

Financial Information 91(2) Interest rate derivatives
Previous fiscal year (As of November 30, 2017)
Hedge accounting
methodSpecial treatment
for interest rate
swap transactions
Deferral hedge
methodTransaction typeInterest rate swap
transactions
Floating receipt
Fixed payment
Interest rate swap
transactions
Floating receipt
Fixed payment

Principle hedged
item

Contract amount
Total

Over one year

(millions of yen)(millions of yen)

Fair value(millions of yen)

Long-term loans
payable

100

72

––
(Note 2)Long-term loans
payable

1,025

925

(18)

(Notes) 1. Fair values are calculated using the prices offered by transacting financial institutions, etc.
2. Interest rate swap transactions to which special treatment is applied are accounted for as an integral part of hedged long-term loans
payable. Thus, their fair values are included in the fair value of long-term loans payable.

Current fiscal year (As of November 30, 2018)
Hedge accounting
methodSpecial treatment
for interest rate
swap transactions
Deferral hedge
methodTransaction typeInterest rate swap
transactions
Floating receipt
Fixed payment
Interest rate swap
transactions
Floating receipt
Fixed payment

Principle hedged
item

Contract amount
Total

Over one year

(millions of yen)(millions of yen)

Fair value(millions of yen)

Long-term loans
payable72

43––(Note 2)Long-term loans
payable

462

412

(14)

(Notes) 1. Fair values are calculated using the prices offered by transacting financial institutions, etc.
2. Interest rate swap transactions to which special treatment is applied are accounted for as an integral part of hedged long-term loans
payable. Thus, their fair values are included in the fair value of long-term loans payable.

(3) Commodity derivatives
Previous fiscal year (As of November 30, 2017)
Not applicable.
Current fiscal year (As of November 30, 2018)
Hedge accounting
methodDeferral hedge
method(Note)

Transaction type

Principle hedged
item

Purchased
commodity futures Accounts payabletransactions–
trade
U.S. dollar

Contract amount
Total

Over one year

(millions of yen)(millions of yen)51

Calculation of fair values
Fair values are calculated using the prices offered by transacting financial institutions etc.

––

Fair value(millions of yen)21

92 Financial Information

Retirement Benefits
1. Summary of retirement benefit plans
In order to fund the retirement benefits to employees, the Company and some of its consolidated
subsidiaries have funded and non-funded defined benefit plans, a retirement benefit advancepayment system and a defined contribution plan.
In the defined benefit corporate pension plans (all of which are funded plans), payments are lumpsums or pensions based on salaries and service periods, or lump sums or pensions through a point
system.
In some of the defined benefit corporate pension plans, trusts to cover retirement benefit
obligations have been established.
In the lump-sum retirement payment systems (all of which are non-funded plans), payments asretirement benefits are lump sums based on salaries and service periods, or lump sums through a
point system.
In the defined benefit corporate pension plans and the lump-sum retirement payment systems atsome consolidated subsidiaries, liabilities for retirement benefits and retirement benefit expenses arecalculated by the simplified method.
2. Defined benefit plan
(1) Reconciliation between the balance at the beginning of the fiscal year and the balance at the endof the fiscal year of retirement benefit obligations
Previous fiscal year
(From December 1, 2016
to November 30, 2017)
Balance of retirement benefit obligations at the
beginning of the fiscal year
Service costs
Interest costs
Actuarial gains or losses incurred
Retirement benefits paid
Other
Balance of retirement benefit obligations at the end of
the fiscal year
(Note)¥

Current fiscal year
(From December 1, 2017
to November 30, 2018)

77,111 million¥ 76,218 million¥
3,301 million¥
321 million¥(614) million¥ (4,050) million¥
148 million¥ 3,222 million¥
322 million¥ (353) million¥ (3,550) million¥ (445) million¥¥ 75,414 million

76,218 million

Retirement benefit expenses of the consolidated subsidiaries that apply the simplified method are included in “Service costs.”(2) Reconciliation between the balance at the beginning of the fiscal year and the balance at the endof the fiscal year of pension plan assets
Previous fiscal year
(From December 1, 2016
to November 30, 2017)
Balance of pension plan assets at the beginning of the
fiscal year
Expected return on pension plan assets
Actuarial gains or losses incurred
Contributions by the employer
Retirement benefits paid
Other
Balance of pension plan assets at the end of the fiscal
year¥

Current fiscal year
(From December 1, 2017
to November 30, 2018)

80,631 million¥ 85,700 million¥
2,030 million¥
2,865 million¥
3,295 million¥ (3,262) million¥
140 million¥ 2,137 million¥ (3,339) million¥ 2,915 million¥ (3,429) million¥ (565) million¥¥ 83,419 million

85,700 million

Financial Information 93(3) Reconciliation between the balances of retirement benefit obligations and pension plan assets at
the end of the fiscal year, and liabilities for retirement benefits and assets for retirement benefits
recognized in the consolidated balance sheet
Previous fiscal year
(From December 1, 2016
to November 30, 2017)

Current fiscal year
(From December 1, 2017
to November 30, 2018)

Retirement benefit obligations for funded plans
Pension plan assets¥
74,048 million¥ (85,700) million¥ 73,013 million¥ (83,419) million

Retirement benefit obligations for non-funded plans¥ (11,651) million¥
2,169 million¥ (10,405) million¥
2,400 million

Net amount of liabilities (assets) recognized on the
consolidated balance sheet¥¥

Liabilities for retirement benefits
Assets for retirement benefits¥
3,147 million¥ (12,630) million¥
3,546 million¥ (11,552) million

Net amount of liabilities (assets) recognized on the
consolidated balance sheet¥¥(9,482) million(9,482) million(8,005) million(8,005) million(4) Amounts of retirement benefit expenses and their components
Previous fiscal year
(From December 1, 2016
to November 30, 2017)

Current fiscal year
(From December 1, 2017
to November 30, 2018)

Service costs
Interest costs
Expected return on pension plan assets
Amortization of actuarial gains or losses
Amortization of prior service costs

¥
¥
¥
¥
¥

3,301 million
321 million(2,030) million
1,585 million
155 million

¥
¥
¥
¥
¥

3,222 million
322 million(2,137) million
1,714 million
171 million

Retirement benefit expenses for defined benefit plans¥

3,332 million¥

3,293 million(Note)

Retirement benefit expenses of the consolidated subsidiaries that apply the simplified method are included in “Service costs.”(5) Adjustments for retirement benefits
The components of the items recorded in adjustments for retirement benefits (before tax effect)
are as follows:
Previous fiscal year
(From December 1, 2016
to November 30, 2017)

Current fiscal year
(From December 1, 2017
to November 30, 2018)

Prior service costs
Actuarial gains or losses¥¥(155) million(6,401) million¥¥(171) million
1,271 million

Total

¥

(6,556) million¥

1,099 million(6) Accumulated adjustments for retirement benefits
The components of the items recorded in accumulated adjustments for retirement benefits (before
tax effect) are as follows:
Previous fiscal year
(As of November 30, 2017)

Current fiscal year
(As of November 30, 2018)

Unrecognized prior service costs
Unrecognized actuarial gains or losses¥¥

719 million
4,682 million¥¥

547 million
5,953 million

Total

¥

5,401 million¥

6,501 million

94 Financial Information(7) Pension plan assetsa) Main components of pension plan assets
The ratio of main categories to total pension plan assets is as follows:
Previous fiscal year
(As of November 30, 2017)

Current fiscal year
(As of November 30, 2018)

Bonds
StocksInsurance assets (general account)
Cash and deposits
Other

37%
36%
6%
6%
15%

34%
35%
6%
10%
15%

Total

100%

100%

(Note)

Total pension plan assets include retirement benefit trusts established for corporate pension plans of 13% for the previous
fiscal year and 14% for the current fiscal year.

b) Method to determine long-term expected rate of return
The long-term expected rate of return on pension plan assets is determined in considerationof the present and expected pension plan asset allocation and the present and long-term
expected rate of return on the various assets that comprise the pension plan assets.
(8) Actuarial assumptions
Major actuarial assumptions

Discount rateLong-term expected rate of return on pension
plan assets

Previous fiscal year
(As of November 30, 2017)

Current fiscal year
(As of November 30, 2018)

0.4% to 0.5%
1.5% to 3.0%

0.5% to 0.6%
1.5% to 3.0%

Expected rates of salary increase are based on an index of salary increase by age, primarily calculated using the base date of May 31,
2017.

3. Defined contribution plans and retirement benefit advance payment systems
At the Company and its consolidated subsidiaries, the required contribution amount to the defined
contribution plans is ¥441 million for the previous fiscal year and ¥476 million for the current fiscal
year, and the amount paid under the retirement benefit advance payment systems is ¥304 million forthe previous fiscal year and ¥132 million for the current fiscal year.

Financial Information 95

Tax Effect Accounting
1. The principal details of deferred tax assets and liabilities are as follows:
Previous fiscal year
(As of November 30, 2017)
Deferred tax assets
Unrealized gains
Reserves for sales rebates
Accrued expenses (sales promotion expenses)
Reserves for bonuses
Accrued social security expenses
Accrued enterprise taxes
Liabilities for retirement benefits
Established amount for trust to cover
retirement benefit obligations
Losses on valuation of golf course
memberships
Tax loss carryforwards
Depreciation
Losses on impairment of fixed assets
Other

Current fiscal year
(As of November 30, 2018)

¥
¥
¥
¥
¥
¥
¥

1,996 million
253 million
822 million
443 million
68 million
317 million
924 million

¥
¥
¥
¥
¥
¥
¥

1,981 million
261 million
867 million
441 million
52 million
449 million
930 million¥

1,084 million¥

1,084 million¥

152 million¥

152 million

¥
¥
¥
¥

841 million
1,259 million
276 million
2,778 million

¥
¥
¥
¥

707 million
1,384 million
966 million
2,697 million

Sub-total deferred tax assets
Valuation allowance¥¥

11,219 million(1,589) million¥¥

11,976 million(1,917) million

Total deferred tax assets
Deferred tax liabilities
Assets for retirement benefits
Differences on valuation of fixed assets
Reserves for reduction entry of property bypurchase
Unrealized holding gains on securities
Other

¥

9,630 million¥

10,059 million¥¥(3,905) million(713) million¥¥(3,462) million(735) million¥(1,200) million¥(1,212) million¥¥(5,937) million(2,101) million¥¥(4,690) million(2,245) million

Total deferred tax liabilities¥(13,858) million¥(12,347) million

Net deferred tax assets (liabilities)¥(4,228) million¥(2,288) million(Note)Net deferred tax assets included in the consolidated balance sheets during the previous fiscal year and the current fiscal year are as
follows:

Previous fiscal year
(As of November 30, 2017)

Current fiscal year
(As of November 30, 2018)

Current assets –– Deferred tax assets¥

2,823 million¥

3,024 million

Fixed assets –– Deferred tax assets¥

2,027 million¥

2,424 million

Current liabilities –– Deferred tax liabilities¥(11) million¥(15) million

Non-current liabilities –– Deferred tax liabilities¥(9,068) million¥(7,722) million

2. The reconciliation between the statutory tax rate and effective tax rate

Statutory tax rate
(Adjustments)
Changes in valuation allowance
Expenses not deductible permanently
Income not taxable permanently
Inhabitant tax levied per capita
Tax deduction
Other
Effective tax rate

Previous fiscal year
(As of November 30, 2017)
The reconciliation is omitted as
the differences between thestatutory tax rate and effective
tax rate are 5% or less of thestatutory tax rate.

Current fiscal year
(As of November 30, 2018)
30.9%
2.1%
1.0%
(0.3%)
0.7%(1.0%)
1.5%
34.9%

96 Financial Information

Business Combination
Business divestiture
At its Board of Directors’ meeting held on June 25, 2018, the Company resolved to transfer of a certain
business of the Company’s consolidated subsidiary, Gourmet Delica Co., Ltd., which involves the
manufacturing and sales of boxed lunches, rice balls, delicatessen foods and other products forconvenience stores (excluding manufacturing and sales businesses pertaining to the Soka Factory andbusinesses pertaining to the Frozen Merchandise Division and the External Sales Development
Department of the Sales Division of the Head Office, the “Business”), to a newly incorporated
company by means of an incorporation-type company split (the “Company Split”). On August 3, 2018,
the Company executed a share transfer agreement with Mitsubishi Corporation, under which theCompany transferred 80% of the shares of the new company on October 1, 2018 and a further 15% of
the same shares during the current fiscal year to Mitsubishi Corporation. As a result, the Company
excluded the said company from the affiliated.
As of October 1, 2018, the split company, Gourmet Delica Co., Ltd., has changed its company nameto Soka Delica Co., Ltd., and the new company has commenced its operations under the name of
Gourmet Delica Co., Ltd. (“(New) Gourmet Delica Co., Ltd.”)
1. Outline of the business divestiture(1) Name of successor company upon company split and name of transferee of the shares(i) Name of successor company upon company split(New) Gourmet Delica Co., Ltd.
(ii) Name of transferee of the shares
Mitsubishi Corporation(2) Content of the divested business
Details of business: Manufacturing and sales of boxed lunches, rice balls, delicatessen foods
and other products for convenience stores(3) Main reason for business divestiture
In order to keep providing high value-added services in a business environment of diversifying
customer needs with respect to the Business, we believe that our consistent management of ouroperations across procurement, manufacturing and sales is necessary. We decided that weshould further develop the Business by accommodating Mitsubishi Corporation’s offer toacquire the stakes of the Business.
On the other hand, we believe that the Company Split and the transfer of the new company’s
shares will increase the shareholder value of the Company as an optimum allocation ofmanagement resources.
(4) Date of company split and share transfer
October 1, 2018(5) Matters concerning additional outline of business divestiture including its legal form
Company split:
Incorporation-type company split whereby Gourmet Delica Co., Ltd. is
the split company and the newly established company is the successor
company
Share transfer:
Share transfer whereby the consideration is specific assets such as cash
Upon transferring the shares, the ownership ratio of the Company in the newly establishedcompany (New) Gourmet Delica Co., Ltd. has changed from 100% to 20% as of October 1, 2018,
thereby making (New) Gourmet Delica Co., Ltd. an affiliate.

Financial Information 97

2. Outline of the accounting treatment implemented(1) Amount of gain or loss on the transfer
Gains on transfer of business¥527 million(2) Book values and major breakdown of the assets and liabilities of the business transferred
Current assets¥3,752 million
Fixed assets¥7,434 million
Total assets¥11,187 million
Current liabilities¥10,753 million
Non-current liabilities¥484 million
Total liabilities¥11,237 million(3) Accounting treatments
On the assumption that our investments in the transferred Business have been deemed
liquidated, we recognize the amount of gain or loss on the transfer of the Business as thedifference between the fair value of assets including cash received as the consideration and theamount of the equity value for the transferred Business.
3. Name of reportable segment in which the divested business was included
Delicatessen Products business
4. Approximate amounts of profit or loss of the divested business included in consolidated statementof income for the current fiscal year
Net sales
Operating income¥27,500 million¥800 million

98 Financial Information

Asset Retirement Obligations
Asset retirement obligations recorded on the consolidated balance sheets
1. Summary of relevant asset retirement obligations
The obligation to restore, etc. based on real estate lease contracts for factories, warehouses, etc.
2. Method for calculating the amount of relevant asset retirement obligations
The amount of asset retirement obligations is calculated by estimating the period of use as eight tofifty-one years following acquisition, and then using the yield on government bonds corresponding
to that time period as the discount rate.
3. Changes in amounts of relevant asset retirement obligations
Previous fiscal year
(From December 1, 2016
to November 30, 2017)
Balance at the beginning of the fiscal year
Increase due to purchases of tangible fixed
assetsAdjustments to interest
Decrease due to payments for asset retirement
obligations
Balance at the end of the fiscal year¥

1,163 million

Current fiscal year
(From December 1, 2017
to November 30, 2018)¥ 1,120 million—¥

0 million¥

7 million¥

7 million¥(50) million¥(4) million¥

1,120 million¥ 1,123 million

Financial Information 99

Segment Information
Segment Information
1. Outline of reportable segments
The reportable segments of the Company are components of the group for which discrete financial
information is available and which are regularly reviewed by the Board of Directors to makedecisions about the allocation of resources and to assess their performance. These segments are
determined by product and service, and consist of “Condiments products,” “Egg products,”“Delicatessen products,” “Processed foods,” “Fine chemical products,” “Distribution system,” and“Common business operations.”
The following is the overview of each segment:
Condiments products:
Egg products:
Delicatessen products:
Processed foods:
Fine chemical products:
Distribution system:
Common business operations:

Mayonnaise, dressings and vinegar
Liquid egg, frozen egg, dried egg, egg spread, thick omelet andshredded egg
Salads, delicatessen foods, boxed lunches, rice balls andpackaged salads
Jams, pasta sauces, sweet corn, baby foods and nursing carefoods
Hyaluronic acid and others
Transportation and warehousing of food products
Sale of food products and food production equipment

2. Method used to calculate amounts of net sales, profit or loss, assets, liabilities and others by thereportable segment
Accounting treatment applied to the reportable segment is much the same with what is describedin “Notes on the Matters Forming the Basis of Preparation of Consolidated Financial Statements.”
Profit of the reportable segment is based on operating income. Intersegment net sales andtransfers are based on prevailing market price.

100 Financial Information

3. Information on amounts of net sales, profit or loss, assets, liabilities and others by the reportablesegment
Previous fiscal year (From December 1, 2016 to November 30, 2017)

Delicatessen Processed

Fine

CommonConsoli-

Condiments

Egg

products

products

products

foods

150,435

100,463

115,50746,604

10,593

131,237

6,847

561,688—561,688

7,139

5,913

204

2,006

344

28,326

11,37455,310(55,310)—

157,574

106,376

115,71248,61010,938

159,564

18,222616,999(55,310)561,688

Segment profit

15,296

4,368

3,847

199

864

5,892

792

31,261—

31,261

Segment assets

122,71458,56344,32739,7999,594

92,278

9,513

376,791

42,416419,207

5,206

2,739

2,326

1,362

532

3,966

660

16,794—

16,794

1,295

—

—

92

—

—

223

1,611

—

1,611

12,023

3,821

1,786

1,762

305

6,893

588

27,182—

27,182chemicalproducts

Distribution(Millions of yen)systembusiness

Total

Adjustments

operations

dated(Note)Net sales
Net sales toexternalcustomers
Intersegment net
sales or transfers
Total

OthersDepreciation andamortization
Investment inaffiliates
accounted for byequity method
Increase intangible andintangible fixed
assets(Notes) 1. “Adjustments” of ¥42,416 million in “Segment assets” mainly includes company-wide assets of ¥49,358 million and elimination of intersegment
receivables and payables of ¥(5,462) million. Major items in company-wide assets are surplus operating funds of the Company (cash and deposits
and securities) and long-term investment funds (investment securities).
2. Adjustments are made between “Segment profit” and “Operating income” reported in the consolidated statements of income.
3. “Depreciation and amortization” and “Increase in tangible and intangible fixed assets” include “Long-term prepaid expenses.”Financial Information 101

Current fiscal year (From December 1, 2017 to November 30, 2018)

Delicatessen Processed

Fine

CommonConsoli-

Condiments

Egg

products

products

products

foods

153,394

100,895

118,323

46,76910,035

138,2635,843

573,525—

573,525

5,201

4,387

109

2,085

317

30,876

11,75154,728(54,728)—

158,596105,282

118,432

48,854

10,352

169,140

17,594

628,254(54,728)

573,525

Segment profit

14,366

6,047

4,415

637

1,269

5,581

750

33,067—33,067

Segment assets

121,859

68,09434,90939,202

8,494

97,363

9,698

379,62241,750421,373

5,834

2,983

2,244

1,495

508

4,458

689

18,215—

18,215

1,347

—

—

100

—

—

234

1,682

—

1,682

5,565

11,719

3,634

2,310

233

7,842

799

32,105—

32,105chemicalproducts

Distribution(Millions of yen)systembusiness

Total

Adjustments

operations

dated(Note)Net sales
Net sales toexternalcustomers
Intersegment net
sales or transfers
Total

OthersDepreciation andamortization
Investment inaffiliates
accounted for byequity method
Increase intangible andintangible fixed
assets(Notes) 1. “Adjustments” of ¥41,750 million in “Segment assets” mainly includes company-wide assets of ¥48,217 million and elimination of intersegment
receivables and payables of ¥(5,160) million. Major items in company-wide assets are surplus operating funds of the Company (cash and deposits
and securities) and long-term investment funds (investment securities).
2. Adjustments are made between “Segment profit” and “Operating income” reported in the consolidated statements of income.
3. “Depreciation and amortization” and “Increase in tangible and intangible fixed assets” include “Long-term prepaid expenses.”102 Financial Information

Related Information
Previous fiscal year (From December 1, 2016 to November 30, 2017)
1. Information by product and service
It is omitted here since similar information is disclosed in “Segment Information.”
2. Information by region(1) Net sales
It is omitted here since net sales to external customers in Japan is more than 90% of net sales
reported in the consolidated statements of income.
(2) Tangible fixed assets
It is omitted here since the amount of tangible fixed assets located in Japan is more than 90% of
tangible fixed assets reported in the consolidated balance sheets.
3. Information by major customers
It is omitted here since there is no customer that accounted for 10% or more of net sales reported in
the consolidated statements of income.
Current fiscal year (From December 1, 2017 to November 30, 2018)
1. Information by product and service
It is omitted here since similar information is disclosed in “Segment Information.”
2. Information by region(1) Net sales
It is omitted here since net sales to external customers in Japan is more than 90% of net sales
reported in the consolidated statements of income.
(2) Tangible fixed assets
It is omitted here since the amount of tangible fixed assets located in Japan is more than 90% of
tangible fixed assets reported in the consolidated balance sheets.
3. Information by major customers
It is omitted here since there is no customer that accounted for 10% or more of net sales reported in
the consolidated statements of income.

Financial Information 103

Information on Losses on Impairment of Fixed Assets by Reportable Segment
Previous fiscal year (From December 1, 2016 to November 30, 2017)
Condiments

Egg

Delicatessen Processed

products

products

products

—

222

358

foods

Fine
chemicalproducts

Distribution
system(Millions of yen)
Commonbusiness

Total

Adjustments

Total

operations

Losses on
impairment of

—

—

—

—

581

—

581

fixed assets

Current fiscal year (From December 1, 2017 to November 30, 2018)
Condiments

Egg

Delicatessen Processed

products

products

products

2,623

219

—

foods

Fine
chemicalproducts

Distribution
system(Millions of yen)
Commonbusiness

Total

Adjustments

Total

operations

Losses on
impairment of

141

—

—

—

2,983

—

2,983

fixed assets

Information on Amortization of Goodwill and Unamortized Balance by Reportable Segment
Previous fiscal year (From December 1, 2016 to November 30, 2017)
Delicatessen Processed

Fine

CommonCondiments

Egg

products

products

products

172

—

—

192

29

10

2

407

—

407

2,368

—

—

1,345

51

13

—

3,778

—

3,778

foods

chemicalproducts

Distribution(Millions of yen)systembusiness

Total

Adjustments

Total

operations

Amortization in
the current fiscal
year
Unamortizedbalance at the endof the current
fiscal year

Current fiscal year (From December 1, 2017 to November 30, 2018)
Delicatessen Processed

Fine

CommonCondiments

Egg

products

products

products

255

—

—

198

29

30

—

514

—

514

—

—

—

1,147

22

64

—

1,233

—

1,233

foods

chemicalproducts

Distribution(Millions of yen)systembusiness

Total

Adjustments

Total

operations

Amortization in
the current fiscal
year
Unamortizedbalance at the endof the current
fiscal year104 Financial Information

Information on Gains on Negative Goodwill by Reportable Segment
Previous fiscal year (From December 1, 2016 to November 30, 2017)
Not applicable.
Current fiscal year (From December 1, 2017 to November 30, 2018)
Not applicable.

Financial Information 105

Related Party Transactions
Related party transactions(1) Transactions between the company filing the consolidated financial statements and related parties
Officers and principal individual shareholders of the company filing the consolidated financial
statements, etc.
Previous fiscal year (From December 1, 2016 to November 30, 2017)

Category

Corporate /individual name

Address

Company whose
officer(s) andhis/her close
relative(s) own a NAKASHIMATO
Shibuya-ku,
majority of theCO., LTD.
Tokyo
voting rights(Note 3)(including thesubsidiary of thecompany)

Company whose
officer(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

Company whose
officer(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

TOHKA CO.,LTD.
(Note 4)

nakato co., ltd(Note 4)

Shibuya-ku,
Tokyo

Minato-ku,
TokyoPaid-in
capital/equityinvestment(millionsof yen)Principal
business

Sales of various
50
processed foods

Percentage ofour voting rights(proportion ofindirectownership)

Direct: 10.3%
Direct: 12.6%
Indirect: 5.9%

Business relationship

Purchase of products,
sale of goods andproducts and paymentof branduse fees
Interlocking officers

100

10

Business ofrenting property/ Leasingbusiness

Wholesale ofliquors andfoods

Direct: 5.9%

Rent of the office, etc.
and purchase of leaseassetsTransaction
amountTransaction(millions ofyen)

Purchase of
products

419

Notes andaccounts
payable--trade

78

Sale of goods
and products

94

Notes andaccounts
receivable-trade

10

Payment ofbrand use
fees

660

Lease ofproperty

15

Investments
and otherassets (Other)946

Accounts
payable-other

6

Purchase ofshares of
subsidiaries
and affiliates(Note 8)
Sales ofshares of
subsidiaries
and affiliates(Note 9)

82

1,242

Repurchaseof shares(Note 10)2,110

Rent ofproperty

1,058

Purchase oflease assets

240Interlocking officers

None

Sale of goods andproducts

Account

Endingbalance(millions ofyen)

Repurchaseof shares(Note 11)7,884

Sale of goods
and products

117

Current
liabilities(Other)Lease
obligations(fixed)Notes andaccounts
receivable-trade

57

196

48

106 Financial Information

Category

Corporate /individual name

Address

Company whose
officer(s) andhis/her close
relative(s) own a To Solutions Co.,
Chofu-shi,
majority of the
Ltd.
Tokyo
voting rights(Note 5)(including thesubsidiary of thecompany)

Paid-in
capital/equityinvestment(millionsof yen)90

Principal
businessPlan,development,sale,maintenanceand operations
support ofcomputersystems

Company whose
officer(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

Yu Shokai Co.,
Ltd.
(Note 6)

Shibuya-ku,
Tokyo

10

Business ofrenting property

Company whose
officer(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

T&A Co., Ltd.
(Note 7)

Shibuya-ku,
Tokyo

100

Business ofrenting property

Percentage ofour voting rights(proportion ofindirectownership)

Direct: 20.0%

Business relationship

Outsourcing ofcomputing work
Interlocking officers

None

Rent of the officeDirect: 1.4%

Rent of the company
dormitories

Transaction
amountTransaction(millions ofyen)

Payment of
IT-related
expense

1,955

Purchase ofsoftware380

Purchase of
tangible fixed
assets41

Lease ofproperty

58

Rent ofproperty

96

Rent ofproperty61

Account

Endingbalance(millions ofyen)Accounts
payable--other316

Investments
and otherassets(Other)

117

Interlocking officers(Notes) 1. In principle, the terms of all transactions are determined individually upon consultation by reference to market prices, etc., as withother transactions in general.
2. With regard to the above-listed transaction amount and ending balance, the amount of ending balance includes consumption taxes but
the transaction amount does not include consumption taxes.
3. Amane Nakashima, Chairman of the Company, and his close relatives, and a company in which they own a majority of voting rights
directly own 82.9% of the voting rights of the company.
4. The company in which Amane Nakashima, Chairman of the Company, and his close relatives own a majority of voting rights directly
owns 100.0% of the voting rights of the company.
Minato Shokai Co., Ltd. succeeded the wine business of NAKASHIMATO CO., LTD. and changed its name to nakato co., ltd.
5. The company in which Amane Nakashima, Chairman of the Company, and his close relatives own a majority of voting rights directly
owns 80.0% of the voting rights of the company.
6. Amane Nakashima, Chairman of the Company, and his close relatives directly own 100.0% of the voting rights of the company.
7. Amane Nakashima, Chairman of the Company, and his close relatives directly own 89.5% of the voting rights of the company.
8. The Company acquired 400 shares of common stock of TO AD KEWPIE CO., LTD. of whose voting rights had directly been wholly
owned by a company whose majority of voting rights are held by Amane Nakashima, chairman of the Company, and his close relatives.
As a result of this acquisition, TO AD KEWPIE CO., LTD. has become a consolidated subsidiary of the Company.
The transaction price was decided through joint discussion of the relevant parties, giving reference to the results of the calculation of thestock price conducted by third-party evaluators.
9. The Company sold 35,000 shares of common stock of NAKASHIMATO CO., LTD. of which Amane Nakashima, chairman of theCompany, and his close relatives, and a company in which they own a majority of voting rights directly own 82.9% of the voting rights
to NAKASHIMATO CO., LTD.
The transaction price was decided through joint discussion of the relevant parties, giving reference to the results of the calculation of thestock price conducted by third-party evaluators.
10. For repurchase of shares, the Company acquired 870,000 shares of common stock of the Company by TOB for ¥2,426 per share, in
accordance with the resolution at the meeting of the Board of Directors on July 26, 2017.
11. For repurchase of shares, the Company acquired 3,250,000 shares of common stock of the Company by TOB for ¥2,426 per share, in
accordance with the resolution at the meeting of the Board of Directors on July 26, 2017.

Financial Information 107

Current fiscal year (From December 1, 2017 to November 30, 2018)

Category

Corporate /individual name

Address

Company whose
officer(s) andhis/her close
relative(s) own a NAKASHIMATO
Shibuya-ku,
majority of theCO., LTD.
Tokyo
voting rights(Note 3)(including thesubsidiary of thecompany)

Company whose
officer(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

Company whose
officer(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

TOHKA CO.,LTD.
(Note 4)

nakato co., ltd(Note 4)

Shibuya-ku,
Tokyo

Minato-ku,
TokyoCompany whose
officer(s) andhis/her close
relative(s) own a To Solutions Co.,
Chofu-shi,
majority of the
Ltd.
Tokyo
voting rights(Note 5)(including thesubsidiary of thecompany)
Company whose
officer(s) andhis/her close
relative(s) own a
Yu Shokai Co.,
Shibuya-ku,
majority of the
Ltd.
Tokyo
voting rights(Note 6)
(including thesubsidiary of thecompany)

Paid-in
capital/equityinvestment(millionsof yen)50

Principal
business

Sales of various
processed foods

Percentage ofour voting rights(proportion ofindirectownership)

Direct: 10.3%
Direct: 10.5%
Indirect: 5.7%

Business relationship

Purchase of products,
sale of goods andproducts and paymentof branduse fees
Interlocking officers

Business ofrenting property
100/ Leasingbusiness

1090Wholesale ofliquors and
foods

Plan,
development,sale,maintenanceand operations
support ofcomputersystems

Business of
10
renting property

Direct: 5.7%

Transaction
amountTransaction(millions ofyen)Account

Endingbalance(millions ofyen)

Purchase of
products

384

Notes andaccounts
payable--trade

76

Sale of goods
and products

112

Notes andaccounts
receivable-trade

14

Payment ofbrand use
fees

600

Purchase ofpromotional
items

60

Accounts
payable-other31

Lease ofproperty

16

Repurchaseof shares(Note 8)

8,095

Rent ofproperty

1,082

Investments
and otherassets (Other)946

Accounts
payable-other

6

Rent of the office, etc.
and purchase of leaseassetsInterlocking officers

None

Sale of goods andproducts

Repurchaseof shares(Note 9)1,156

Sale of goods
and products

129

Notes andaccounts
receivable-trade

33

Payment of
IT-related
expense

2,046

Accounts
payable--other

249

Purchase ofsoftware208

Lease ofproperty

60

Investments
and otherassets(Other)116

Interlocking officers

Direct: 20.0%

Outsourcing ofcomputing work
Interlocking officers

None

Rent of the officeRent ofproperty95

108 Financial Information

Category

Corporate /individual name

Address

Paid-in
capital/equityinvestment(millionsof yen)Company whose
officer(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

T&A Co., Ltd.
(Note 7)

Shibuya-ku,
Tokyo

100

Principal
business

Business ofrenting property

Percentage ofour voting rights(proportion ofindirectownership)

Direct: 1.4%

Business relationship

Rent of the company
dormitories

Transaction
amountTransaction(millions ofyen)

Rent ofproperty

Account

Endingbalance(millions of
yen)

61

Interlocking officers(Notes) 1. In principle, the terms of all transactions are determined individually upon consultation by reference to market prices, etc., as withother transactions in general.
2. With regard to the above-listed transaction amount and ending balance, the amount of ending balance includes consumption taxes but
the transaction amount does not include consumption taxes.
3. Amane Nakashima, Chairman of the Company, and his close relatives, and a company in which they own a majority of voting rights
directly own 82.9% of the voting rights of the company.
4. The company in which Amane Nakashima, Chairman of the Company, and his close relatives own a majority of voting rights directly
owns 100.0% of the voting rights of the company.
5. The company in which Amane Nakashima, Chairman of the Company, and his close relatives own a majority of voting rights directly
owns 80.0% of the voting rights of the company.
6. Amane Nakashima, Chairman of the Company, and his close relatives directly own 100.0% of the voting rights of the company.
7. Amane Nakashima, Chairman of the Company, and his close relatives directly own 89.5% of the voting rights of the company.
8. For repurchase of shares, the Company acquired 3,500,000 shares of common stock of the Company by TOB for ¥2,313 per share, in
accordance with the resolution at the meeting of the Board of Directors on October 2, 2018.
9. For repurchase of shares, the Company acquired 500,000 shares of common stock of the Company by TOB for ¥2,313 per share, in
accordance with the resolution at the meeting of the Board of Directors on October 2, 2018.

Financial Information 109(2) Transactions between consolidated subsidiaries of the company filing the consolidated financial
statements and related parties
Officers and principal individual shareholders of the company filing the consolidated financial
statements, etc.
Previous fiscal year (From December 1, 2016 to November 30, 2017)
Category

Corporate /individual name

Address

Company whose
officer(s) andhis/her close
relative(s) own a NAKASHIMATO
Shibuya-ku,
majority of theCO., LTD.
Tokyo
voting rights（Note 3）(including thesubsidiary of thecompany)

Company whose
officer(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

Company whose
officer(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)
Company whose
officer(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)
Company whose
officer(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

TOHKA CO.,LTD.
（Note 4）

nakato co., ltd(Note 4)

Shibuya-ku,
Tokyo

Minato-ku,
Tokyo

To Solutions Co.,
Chofu-shi,
Ltd.
Tokyo
(Note 5)

MINATOSINGAPORE
PTE. LTD.
(Note 6)Singapore

Capitalstock(millionsof yen)50

Principal
business

Sales of various
processed foods

Ratio of voting
rights owned by
the Company(owned in the
Company)

Direct: 10.3%
Direct: 12.6%
Indirect: 5.9%

Business relationship

Purchase of products
andsale of goods andproducts

Transaction
amountTransaction(millions ofyen)
Purchase of
products

530

Sale ofgoods andproducts

110

Rent ofproperty

18

Rent ofproperty

1,037Interlocking officers

100

10

90

Business ofrenting property/ Leasingbusiness

Wholesale ofliquors and
foods

Plan,
development,sale,maintenanceand operations
support ofcomputersystems

1,000,000 Sale of imported
Singaliquors andporefoods indollars
SingaporeDirect: 5.9%

Rent of the office, etc.
and purchase of leaseassetsInterlocking officers

None

Direct: 20.0%

Sale of goods andproducts, purchase of
products

Outsourcing ofcomputing work
Interlocking officers

None

Sale of goods andproducts
Interlocking officers

Purchase oflease assets

108

Account

Notes andaccounts
payabletrade
Notes andaccounts
receivabletrade
Accounts
payableother
Current
assets(Other)Investments
and otherassets(Other)Current
liabilities(Other)Lease
obligations(fixed)Endingbalance(millions of
yen)

64

19

6

4

242

19

88

Payment of
leasecancellation
penalties

29

Sale ofgoods andproducts

321

Notes andaccounts
receivabletrade30

Purchase of
products

71

Notes andaccounts
payabletrade

23

Payment of
IT-related
expense

1,058
Accounts
payableother207

Notes andaccounts
receivabletrade

12

Purchase ofsoftware238

Sale ofgoods andproducts

75(Notes) 1. In principle, the terms of all transactions are determined individually upon consultation by reference to market prices, etc., as withother transactions in general.
2. With regard to the above-listed transaction amount and ending balance, the amount of ending balance includes consumption taxes but
the transaction amount does not include consumption taxes.
3. Amane Nakashima, Chairman of the Company, and his close relatives, and a company in which they own a majority of voting rights
directly own 82.9% of the voting rights of the company.
4. The company in which Amane Nakashima, Chairman of the Company, and his close relatives own a majority of voting rights directly
owns 100.0% of the voting rights of the company.
Minato Shokai Co., Ltd. succeeded the wine business of NAKASHIMATO CO., LTD. and changed its name to nakato co., ltd.

110 Financial Information

5. The company in which Amane Nakashima, Chairman of the Company, and his close relatives own a majority of voting rights directly
owns 80.0% of the voting rights of the company.
6. The company in which Amane Nakashima, Chairman of the Company, and his close relatives own a majority of voting rights directly
owns 95.0% of the voting rights of the company.

Financial Information 111

Current fiscal year (From December 1, 2017 to November 30, 2018)
Category

Corporate /individual name

Address

Company whose
officer(s)and his/her close
relative(s) own a NAKASHIMATO
Shibuya-ku,
majority of theCO., LTD.
Tokyo
voting rights（Note 3）(including thesubsidiary of thecompany)

Company whose
officer(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

Company whose
officer(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)
Company whose
officer(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)
Company whose
officer(s) andhis/her close
relative(s) own amajority of thevoting rights(including thesubsidiary of thecompany)

TOHKA CO.,LTD.
（Note 4）

Shibuya-ku,
Tokyo

Capitalstock(millionsof yen)50

Principal
business

Sales of various
processed foods

Ratio of voting
rights owned by
the Company(owned in the
Company)

Direct: 10.3%
Direct: 10.5%
Indirect: 5.7%

Business relationship

Purchase of products
andsale of goods andproducts
Interlocking officers

Business ofrenting property
100/ Leasingbusiness

Direct: 5.7%

Transaction
amountTransaction(millions ofyen)
Purchase of
products

523

Sale ofgoods andproducts

100

Rent ofproperty

17

Capitalincreasethroughthird party
allocation ofshares(Note 7)541

Rent ofproperty

818

Rent of the office, etc.
and purchase of leaseassetsInterlocking officers
Purchase oflease assets

nakato co., ltd(Note 4)

Minato-ku,
Tokyo

10

Wholesale ofliquors and
foods

None

Sale of goods andproducts and purchaseof productsInterlocking officers

To Solutions Co.,
Chofu-shi,
Ltd.
Tokyo
(Note 5)

MINATOSINGAPORE
PTE. LTD.
(Note 6)Singapore

90

Plan,
development,sale,maintenanceand operations
support ofcomputersystems

1,000,000 Sale of imported
Singaliquors andporefoods indollars
SingaporeDirect: 20.0%

Outsourcing ofcomputing work
Interlocking officers

None

Sale of goods andproducts
Interlocking officers

14

Account

Notes andaccounts
payabletrade
Notes andaccounts
receivabletrade
Accounts
payableother

Current
assets(Other)Investments
and otherassets(Other)Current
liabilities(Other)Lease
obligations(fixed)Endingbalance(millions of
yen)

75

21

3

4

104

2

13

Sale ofgoods andproducts

335

Notes andaccounts
receivabletrade

45

Purchase of
products

44

Notes andaccounts
payabletrade

7

Payment of
IT-related
expense

1,060
Accounts
payableother327

Notes andaccounts
receivabletrade

24

Purchase ofsoftware353

Sale ofgoods andproducts

96(Notes) 1. In principle, the terms of all transactions are determined individually upon consultation by reference to market prices, etc., as withother transactions in general.
2. With regard to the above-listed transaction amount and ending balance, the amount of ending balance includes consumption taxes but
the transaction amount does not include consumption taxes.
3. Amane Nakashima, Chairman of the Company, and his close relatives and a company in which they own a majority of voting rights
directly own 82.9% of the voting rights of the company.
4. The company in which Amane Nakashima, Chairman of the Company, and his close relatives own a majority of voting rights directly
owns 100.0% of the voting rights of the company.
5. The company in which Amane Nakashima, Chairman of the Company, and his close relatives own a majority of voting rights directly
owns 80.0% of the voting rights of the company.
6. The company in which Amane Nakashima, Chairman of the Company, and his close relatives own a majority of voting rights directly
owns 95.0% of the voting rights of the company.

112 Financial Information

7. The total issuance amount with respect to the capital increase through third party allocation of shares has been determined on the basisof the closing price on the business day immediately preceding the date on which the Board of Directors of the Company’s consolidated
subsidiary Aohata Corporation resolved to carry out the capital increase through third party allocation of shares.

Financial Information 113

Per Share Information
Previous fiscal year
(From December 1, 2016
to November 30, 2017)

Current fiscal year
(From December 1, 2017
to November 30, 2018)

Net assets per share(yen)

1,539.94

1,582.27

Earnings per share(yen)

121.05124.85(Notes) 1.
2.

“Earnings per share – diluted” is not presented because of no issue of potential shares.
Calculation basis of net assets per share is as follows.

Previous fiscal year
(As of November 30, 2017)
Total net assets

Current fiscal year
(As of November 30, 2018)(millions of yen)

263,432

266,100

Amount subtracted from total net assets(millions of yen)

36,992

39,768(36,992)(39,768)

Net assets attributable to common stockat the end of the fiscal year
(millions of yen)

226,439

226,332

Number of shares of common stockat the end of the fiscal year
(thousand shares)

147,044

143,043(Non-controlling interests)(millions of yen)3.

Calculation basis of earnings per share is as follows.

Previous fiscal year
(From December 1, 2016
to November 30, 2017)

Current fiscal year
(From December 1, 2017
to November 30, 2018)

Profit attributable to owners of parent(millions of yen)

18,09918,320

Amounts not attributable to common shareholders(millions of yen)––––

Profit attributable to owners of parent attributable tocommon stock(millions of yen)

18,09918,320Weighted average number of shares of common stock(thousand shares)

149,522

146,736

114 Financial Information

Significant Subsequent Events
1. Changes in reportable segment
Having newly formulated the Medium-term Business Plan that covers the three years starting fromfiscal year 2019, we have made changes to the Group’s framework for promoting business as of the
fiscal year ending November 30, 2019, in order to better develop our business activities in a mannerthat aligns with areas of management responsibility, as follows: Changes in business category
 All business operations of the Processed foods business except the Aohata Corporation portion
have been transferred to the “Condiments products business” and renamed the “Condiments andprocessed foods business.”
 The Aohata Corporation portion of the “Processed foods business” has been split off as the “Fruit
solution business.” Leasing related transactions that had been included in the “Distribution system business” havebeen transferred to “Common business operations,” and this segment has been renamed“Distribution business.”
 Company-wide expenses

Expenses that cannot be allocated to any specific business (headquarters expenses, etc.) have been
separated as “Company-wide expenses.”
In line with these changes, we have changed the reportable segments of the Group to“Condiments and processed foods,” “Salad and delicatessen,” “Egg,” “Fruit solution” “Finechemicals,” “Distribution,” and “Common business operations,” from the previous reportablesegments of “Condiments products,” “Egg products,” “Delicatessen products,” “Processed foods,”“Fine chemical products,” “Distribution system,” and “Common business operations.”
The information on amounts of sales, profit or loss, assets, liabilities and others by the reportablesegment for the current fiscal year in the case of application of the new segment categories are as
follows:

Financial Information 115

Current fiscal year (From December 1, 2017 to November 30, 2018)
Condiments
andSalad andprocessed delicatessen

Egg

Fruit

Fine

solutionchemicals(Millions of yen)

CommonDistribution

business

ConsoliTotal

Adjustments

operations

foods

dated
(Note)Net sales
Net sales to184,292

118,323

100,895

15,871

10,035

138,2635,843

573,525—

573,525

6,750

109

4,387

420

317

30,876

9,707

52,568(52,568)—

191,042

118,432

105,282

16,291

10,352

169,140

15,550626,094(52,568)

573,525

Segment profit

19,833

4,288

7,789

678

1,459

4,661

1,464

40,175(7,107)33,067

Segment assets

143,61434,86867,63017,355

8,936

81,091

24,324

377,819

43,553421,373

7,013

2,263

2,970

521

568

3,711

922

17,972242

18,215

1,448

—

—

—

—

—

234

1,682

—

1,682

7,341

3,656

11,750

891

303

7,470

562

31,975130

32,105externalcustomers
Intersegment net
sales or transfers
Total

OthersDepreciation andamortization
Investment inaffiliates
accounted for byequity method
Increase intangible andintangible fixed
assets(Notes) 1. Adjustments are as follows:(i) “Adjustments” of ¥(7,107) million in “Segment profit” includes Company-wide expenses unallocated to the respective reportable segments.
The company-wide expenses mainly consist of expenditures pertaining to general and administrative expenses not attributable to thereportable segments.
(ii) “Adjustments” of ¥43,553 million in “Segment assets” mainly includes company-wide assets of ¥50,036 million and elimination ofintersegment receivables and payables of ¥(5,179) million. Major items in company-wide assets are surplus operating funds of the Company(cash and deposits and securities) and long-term investment funds (investment securities).
(iii) “Adjustments” of ¥242 million in “Depreciation and amortization” and adjustments of ¥130 million in “Increase in tangible and intangible
fixed assets” under “Others” are mainly in relation to Company-wide assets unallocated to the reportable segments.
2. Adjustments are made between “Segment profit” and “Operating income” reported in the consolidated statements of income.
3. “Depreciation and amortization” and “Increase in tangible and intangible fixed assets” include “Long-term prepaid expenses.”116 Financial Information

2. Acquisition of significant assets and termination of significant agreements
On October 17, 2018, Aohata Corporation, a consolidated subsidiary of the Company, entered into anagreement for acquisition of trademark rights for the “Aohata” brand held by Nakashimato Co., Ltd.
(the “Acquisition”), which was resolved at the Board of Directors meeting of Aohata Corporation
held on the same date, and completed the Acquisition on December 3, 2018. In conjunction with theAcquisition of the “Aohata” brand, Nakashimato Co., Ltd. and the Company agreed to terminate thetrademark license agreement and Aohata Corporation and the Company agreed to terminate thetrademark sublicense agreement in relation to the “Aohata” brand, respectively.
(i)

Reason for the Acquisition
The Company has decided that, in addition to the combined operation of manufacturing andsales, Aohata Corporation should establish its independent operating structure, including theplanning and management of trademark of “Aohata” brand, since it will contribute for its swift
decision-making process and improving the market competitiveness to respond to diversifying
customer needs and changing preferences.

(ii) Name of the counterparty to the agreement for the Acquisition
Nakashimato Co., Ltd.
(iii) Class of assets subject to the Acquisition
Trademark rights for the “Aohata” brand(iv) Content of the agreement
Agreement for the acquisition of the above assets, and agreements for termination of license andsublicense related to the above assets(v)

Date of the Acquisition and termination of the license agreements
December 3, 2018(vi) Value of the Acquisition¥2,100 million(vii) Significant impact of the conclusion and termination of agreements on operating activities andothersAs described in the “Reason for the Acquisition”, the Company has decided that holding oftrademark rights for the “Aohata” brand by Aohata Corporation will contribute to improve themarket competitiveness to respond to diversifying customer needs and changing preferences.
In addition, the Company aims to promote the “Aohata” brand not only for jams but also in new
fields and increase medium- to long-term earning capacity. However, since it is difficult todetermine the impact for the future, information on the impact has been omitted.
Impact of an increase in cost of amortization of trademark rights and a decrease in expenseof royalties is currently being evaluated.

Financial Information 117

3. Issuance of corporate bonds
The Company issued unsecured bonds as described below on February 15, 2019, based on the
resolution at the meeting of the Board of Directors held on January 23, 2019.
The 3rd unsecured bonds(i)Amount issued:¥10,000 million(ii)

Issue price:¥100 per ¥100 of each bond(iii) Interest rate per annum:

0.230%(iv) Payment date:February 15, 2019(v)

Maturity date:February 13, 2026

(vi) Redemption method:

Bullet redemption(vii) Redemption amount:¥100 per ¥100 of each bond(viii) Application of funds:

Fund for the redemption of the 2nd unsecured bonds(ix) Special provision:

Limited Inter-Bond Pari Passu Clause118 Financial Information(e) Consolidated Supplementary Statements
1. Description of bonds
Corporate
name

Issue

Issue date

The
The 2nd Unsecured Bonds
Company

BeginningbalanceEndingbalance

Interest rate
per annum(millions of yen) (millions of yen)(%)

PledgedMaturity date

10,00010,000(10,000)

None

February 15, 2019

February15, 2012

0.777(Notes) 1. The figures in parentheses indicate the amounts that will be redeemed within one year.
2. The aggregate amount that will be redeemed in annual maturities after the fiscal year end of the Company’s consolidated financial
statements is as follows:

Over three years
to four years(millions of yen)––Over four years
to five years(millions of yen)––

Beginning balance(millions of yen)Ending balance(millions of yen)

Average interest rate
per annum (%)

Short-term loans payable

5,883

7,108

0.501

––

Current portion of long-term loans payable

2,153

2,387

0.419

––

Current portion of lease obligations

1,619

1,449

1.501

––

Long-term loans payable

35,94736,664

0.311

From December 2019
to August 2028

Long-term lease obligations

4,506

3,804

1.537

From December 2019
to March 2041

9

––

––

––

50,12051,414––––

Over one year
to two years(millions of yen)––

Within one year
(millions of yen)
10,000Over two years
to three years(millions of yen)––Over five years(millions of yen)––

2. Description of bank loans etc.
Item

Other interest-bearing debt
Long-term accounts payable (including
current portion)
Total

Repayment date

(Notes) 1. Average interest rates are calculated by using interest rates and balance of loans payable at the end of the current fiscal year.
2. The annual aggregate amount of long-term loans payable and lease obligations repaid after the fiscal year end of the Company’s
consolidated financial statements is as follows:

Over one year
to two years(millions of yen)Over two years
to three years(millions of yen)Over three years
to four years(millions of yen)Over four years
to five years(millions of yen)Over five years(millions of yen)

Long-term loans payable

2,371

2,545

11,395

1,736

18,615

Lease obligations

1,172

783

545

285

1,017

3. Description of asset retirement obligations
The amounts of asset retirement obligations at the beginning and the end of the current fiscal
year are omitted pursuant to the provisions of Article 92-2 of the Regulation on Consolidated
Financial Statements, since they are at or below one percent of the total amounts of liabilities
and net assets at the beginning and the end of the current fiscal year, respectively.

Financial Information 119

Other
Quarterly information for the current fiscal year
(Cumulative period)

Three months

Six months

Nine months

Fiscal year

(millions of yen)

137,212285,004

433,446

573,525

Profit before income taxes(millions of yen)

5,860

16,086

26,24933,586

Profit attributable to owners of parent(millions of yen)

3,247

9,070

14,68918,320Earnings per share

22.09

61.69

99.90

124.85First quarter

Second quarter

Third quarter

Fourth quarter

22.09

39.60

38.21

24.86

Net sales(yen)(Accounting period)
Earnings per share(yen)120 Financial Information

Independent Auditors’ Audit Report andInternal Control Audit ReportFebruary 27, 2019

The Board of Directors
KEWPIE KABUSHIKI-KAISHA(Kewpie Corporation)
Ernst & Young ShinNihon LLC
Designated andEngagement Partner

Yoshimi Kimura
Certified Public Accountant(signed and sealed)

Designated andEngagement Partner

Yoshiyuki Sakuma
Certified Public Accountant(signed and sealed)

Designated andEngagement Partner

Miyuki Nakamura
Certified Public Accountant(signed and sealed)<Audit of financial statements>
Pursuant to Paragraph 1 of Article 193-2 of the Financial Instruments and Exchange Law of Japan, we have audited the consolidated
financial statements of KEWPIE KABUSHIKI-KAISHA presented in “Financial Information” from December 1, 2017 to November 30,
2018, namely, the consolidated balance sheet, the consolidated statement of income, the consolidated statement of comprehensive
income, the consolidated statement of changes in net assets, the consolidated statement of cash flows, the significant matters forming
the basis for the preparation of consolidated financial statements, other notes and the consolidated supplementary statements, allexpressed in yen.
Management’s Responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for designing and operating such internal control as management determines
is necessary to enable the preparation and fair presentation of the consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit inaccordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatementof the consolidated financial statements, whether due to fraud or error. The purpose of an audit of the consolidated financial statements
is not to express an opinion on the effectiveness of the entity’s internal control, but in making these risk assessments the auditor
considers internal controls relevant to the entity’s preparation and fair presentation of the consolidated financial statements in orderto design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial
position of KEWPIE KABUSHIKI-KAISHA and its consolidated subsidiaries as at November 30, 2018, and their consolidated financial
performance and cash flows for the year then ended in conformity with accounting principles generally accepted in Japan.

Financial Information 121<Audit of internal control>
Pursuant to Paragraph 2 of Article 193-2 of the Financial Instruments and Exchange Law of Japan, we also have audited theaccompanying Management’s Report on Internal Control over Financial Reporting for the consolidated financial statements as at
November 30, 2018 of KEWPIE KABUSHIKI-KAISHA and its consolidated subsidiaries (the “Company”) (the “Management’s
Report”).
Management’s Responsibility for the Management’s ReportManagement is responsible for designing and operating internal control over financial reporting, and the preparation and fairpresentation of the Management’s Report in accordance with assessment standards for internal control over financial reporting
generally accepted in Japan.
Internal control over financial reporting may not completely prevent or detect misstatements.
Auditor’s Responsibility
Our responsibility is to express an opinion on the Management’s Report based on our internal control audit. We conducted our internal
control audit in accordance with auditing standards for internal control over financial reporting generally accepted in Japan. Thosestandards require that we plan and perform the internal control audit to obtain reasonable assurance about whether the Management’s
Report is free from material misstatement.
An internal control audit involves performing procedures to obtain audit evidence about the results of the assessment of internal
control over financial reporting in the Management’s Report. The procedures selected depend on the auditor’s judgment, including
the significance of effects on the reliability of financial reporting. An internal control audit also includes evaluating disclosures on
scope, procedures and conclusions of management’s assessment of internal control over financial reporting, as well as evaluating theoverall presentation of the Management’s Report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the Management’s Report referred to above, which represents that internal control over financial reporting of theconsolidated financial statements as at November 30, 2018 is effective, presents fairly, in all material respects, the result of the
management’s assessment on internal control over financial reporting in conformity with assessment standards for internal control
over financial reporting generally accepted in Japan.
Conflicts of Interest
We have no interest in the Company which should be disclosed in compliance with the Certified Public Accountants Act.

*The above Independent Auditors’ Audit Report and Internal Control Audit Report are translations of the original reports, which
are based on Paragraph 1 and Paragraph 2, respectively, of Article 193-2 of the Financial Instruments and Exchange Law ofJapan.

122 Stock Information of Reporting Company

VI. Stock Information of Reporting Company
Fiscal year

From December 1 to November 30

The Ordinary General Meeting of Shareholders

Held in February

Record dateNovember 30

Dividend record dates

May 31, November 30

Shares per trading unit

100

Purchase of shares less than one unit:(Special account)
Sumitomo Mitsui Trust Bank, Limited, Stock Transfer Agency Business Planning
Department
4-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo(Special account)
Sumitomo Mitsui Trust Bank, Limited, Stock Transfer Agency Business Planning
Department
4-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo

Handling office

Agent

Shareholders’ contacts—

Stock transfer fee(Note 1)The Company shall publish its public notices by electronic means. However, if it is
impossible to post electronic public notices because of an accident or other unavoidable
circumstances, the public notices shall be made by publication in the Nikkei.
URL for public notice: https://www.kewpie.co.jp/company/
The Company provides a gift of the Group’s product(s) around early March to thoseshareholders who are recorded in the shareholder registry as of November 30, and who haveheld at least one trading unit (100 shares) of the Company’s shares for three or moreconsecutive years,* in accordance with the gift criteria presented below.
Gift criteria
Number of shares held
Contents of gift
Assortment of the Group products valued at
100 shares to 499 shares¥1,000Assortment of the Group products valued at
500 shares to 999 shares¥2,000Assortment of the Group products valued at
1,000 shares or more
¥3,000* A shareholder who has held the Company’s shares for three years or more is defined as ashareholder who has been registered in the shareholder registry as of May 31 andNovember 30 under the same shareholder number on seven or more consecutive
occasions.

Newspaper for announcements

Shareholder privileges(Notes) 1. The calculating method below shall be used to determine fees for purchase of shares less than one unit on the basis of the method below, in which
total purchase fees per trading unit are divided by the total number of shares purchased and multiplied by the number of shares held by theshareholder.
(Calculation Method) Purchase prices per share, determined by the final TSE market price, are multiplied by the number of shares per trading
unit, and the sum total amount derived therefrom is applied, as in the following table, to find the percentage fee charged.

Total amount

Percentagefee¥1 million or less
1.150%
Over ¥1 million – ¥5 million
0.900%
Over ¥5 million – ¥10 million
0.700%
Over ¥10 million – ¥30 million
0.575%
Over ¥30 million – ¥50 million
0.375%(Amounts of less than ¥1 are rounded down.)
However, if the purchase fee per trading unit calculated above is less than ¥2,500, the fee shall be ¥2,500.
2. In accordance with the Articles of Incorporation, the Company’s shareholders cannot exercise rights other than those listed below for shares lessthan one unit.
(1) Rights listed in items of Article 189, Paragraph 2 of the Companies Act(2) Right to receive allocation of shares for subscription or stock acquisition rights for subscription in accordance with the number of shares owned(3) Right stipulated by Article 166, Paragraph 1 of the Companies Act to request acquisition of shares with rights to acquire new shares

Management’s Report on Internal Control over Financial Reporting 1

The information contained in this report is derived from Kewpie
Corporation’s (the “Company”) Management’s Report on Internal Control
over Financial Reporting in Japanese filed with the Commissioner of the
Financial Services Agency on February 28, 2019 in accordance with the
Financial Instruments and Exchange Law, and has been translated into
English for the convenience of readers outside Japan.

Document Title:

Management’s Report on Internal Control overFinancial Reporting

Corporate Name:KEWPIE KABUSHIKI-KAISHAEnglish Corporate Name:

Kewpie Corporation

Name and Title of Representative:

Osamu Chonan
Representative Director
President and Chief Executive Corporate Officer

Location of Head Office:4-13, Shibuya 1-chome, Shibuya-ku,
Tokyo 150-0002, Japan

2 Stock Information of Reporting Company

1. Basic Framework of Internal Control over Financial Reporting
The Representative Director, President and Chief Executive Corporate Officer Osamu Chonan is
responsible for designing and operating the Company’s internal control over financial reporting. He
designs and operates internal control over financial reporting in accordance with the basic frameworkof internal control presented in “On the Setting of the Standards and Practice Standards for Management
Assessment and Audit concerning Internal Control Over Financial Reporting (Council Opinions)”
issued by the Business Accounting Council.
Internal control achieves its objectives to a reasonable extent given that all individual components ofinternal control are integrated and function as a whole. Internal control over financial reporting forconsolidated financial statements may not completely prevent or detect misstatements in financial
reporting.

2. Scope of Assessment, Assessment Date and Assessment Procedure
Assessment of internal control over financial reporting was carried out as of November 30, 2018, whichis the final day of the Company’ business year, in accordance with generally accepted assessment
standards for internal control over financial reporting.
In this assessment, the business processes to be assessed are selected after an assessment of internal
control that has a significant impact on overall financial reporting on a consolidated basis (“companylevel internal control”) is carried out, and in consideration of the results of the said assessment. In
assessing the said business processes, an assessment of the effectiveness of internal control is conductedby identifying the key controls that would have a material impact on the reliability of financial reporting
after analyzing the selected business processes and by assessing the status of design and operation of
the said key controls.
The scope of assessment of internal control over financial reporting is determined to be the scopethat is necessary from the viewpoint of materiality of the impact on the reliability of financial reporting
regarding the Company, its consolidated subsidiaries and its equity-method affiliates. The materialityof the impact on the reliability of financial reporting is determined in consideration of the materiality ofquantitative and qualitative impacts. The scope of assessment of business process-level internal control
is determined reasonably in light of the results of an assessment of company-level internal control
carried out with respect to the Company and its 21 consolidated subsidiaries. Other consolidated
subsidiaries and equity-method affiliates are not included in the scope of assessment of company-levelinternal control as they are deemed to be immaterial in terms of quantitative and qualitative materiality.
To determine the scope of assessment of business process-level internal control, “significant businesslocations” are selected. They are composed of business locations determined in descending order basedon their net sales levels in the previous fiscal year (after elimination of intra-group transactions) until
their combined amount reaches approximately two thirds of consolidated net sales in the previous fiscal
year (as a result, three companies were selected), as well as other significant outsourced businesslocations. At the selected significant business locations, business processes leading to net sales, accounts
receivable––trade, inventories and accounts payable––trade which are deemed as accounting items thatare closely associated with a company’s business purpose, are included in the scope of the assessment.
In addition, the scope of assessment includes other business locations as well as selected significant
business locations with respect to certain business processes. Specifically, business processes that havea high risk of misstatement and relate to significant accounting items involving estimates and forecasts,
and business processes relating to a business or operation dealing with high-risk transactions, are added
to the scope of assessment as business processes with substantial significance in terms of effects onfinancial reporting, regardless of whether they occur at selected significant business locations.

Stock Information of Reporting Company 3

3. Assessment Result
As a result of the above assessment, we judge that the Company’s internal control over its financial
reporting is effective as of November 30, 2018.

4 Financial Information

American Depositary Receipts:
Ratio (ADR : ORD): 1 : 2
Exchange: OTC (Over-the-Counter)
Symbol: KWPCY
CUSIP: 493054100
Depositary:
The Bank of New York Mellon
101 Barclay Street FL22W, New York, NY 10286, U.S.A.
Tel: (212) 815-2042
U.S. toll free: 888-269-2377 (888-BNY-ADRS)URL: www.adrbnymellon.com